Briefing.Com summary of SEG and market opening:
08:25 ET ******
SEAGATE TECHNOLOGY (SEG) 42 3/8 CLOSED. Computer disk drive maker made it official last night by warning that its fiscal 4th qtr results would be below expectations due to weak demand for its high-performance computer disk drive products. For the past week, the stock had come under selling pressure among rumors that supply was far ahead of demand for its high-end drives. Last night, the company confirmed what had already been discounted in the stock by stating
that revenues for the three months ended in June are expected to be between 6% to 10% below the $2.5 billion reported for the 3rd qtr ended in March. Earnings for the 4th qtr are also expected to fall below the 3rd qtr operating net of $1.01 a share. The company was projected to make $1.06 a share, according to the First Call mean estimate. In the year-ago period, Seagate earned $101 million, or $0.92 a primary share, on revenues of $2.01 billion. Seagate has about 60% of the high-end drive market and, along with more supply, the company seems to be losing some market share to Quantum (QNTM 39 7/8), IBM (IBM 87 1/8) and Western Digital (WDC 58 3/8). Now that the news is out, where does the stock go from here. It seems that outside of the high-end area, demand for disk drives remains strong as personal computers continue to record strong sales. According to CEO Al Shugard, the long-term outlook for the storage business remains robust, aside from temporary product mix shifts. He went on to say that "the data storage business long-term, the potential is outstanding." Thus,while the stock is likely to open weaker this morning, the price drop may only prove to be short-term
Stock Indications: following warnings by Seagate (SEG) and Cabletron (CS), expect tech sector to get hit in the early-going, with the type of recovery experienced on Friday following the Intel (INTC) warning not likely to occur. Currently, Cabletron shares are trading 9 3/4 points lower in the 3rd-market. Seagate shares just reopened, but no indication is available. Other issues indicated to open substantially lower, include networking stocks CSCO -3 1/4 and ASND -3 3/4, as well as disk drive related stocks QNTM -2 1/2 and RDRT -2... |
