By Senad Karaahmetovic
Seagate Technology (NASDAQ:STX) stock is trading over 4% lower in pre-open Thursday after the company reported weaker-than-expected FQ3 results.
Seagate posted a surprising loss per share of $0.28 as the Street was expecting a profit of $0.24 per share. Revenue came in at $1.86 billion, softer than the $1.99B expected. Overall, sales declined 34% year-over-year with adjusted and operating gross margin crashing to 18.7% and 3.5% from 29.2% and 16.8% year-over-year, respectively.
“We are seeing a more elongated customer inventory correction that led to weaker than expected nearline demand among a few large customers late in the quarter. Consequently, our March quarter revenue came in at the low-end of our guidance range, which along with underutilization charges and other factors had a severe impact on our reported margins and profitability,” said Dave Mosley, Seagate’s chief executive officer.
Seagate sees FQ4 earnings between flat and a loss per share of $0.40. Analysts were expecting a profit of $0.53. Revenue is seen at $1.7B (up or down $150 million), missing the $2.06B consensus.
“Looking ahead, we now expect demand recovery to begin towards the end of the calendar year. In response to this dynamic environment, we are taking aggressive actions to lower our cost structure while still positioning Seagate to thrive over the long-term and sustain our technology leadership. To that end, we continue to execute on our product roadmap, including our strategically vital HAMR platform that we launched in April, as anticipated.”
Seagate shares are up 19.5% year-to-date.