Savitz on STX's report and CC. For some reason, the guy loves Seagate. He is always getting interviews with Luczo and O'Malley.
Jan 20, 2010
6:58 PM
Seagate Sees PC Units Up 15-20% in 2010
Posted by Eric Savitz
Seagate (STX) CFO Patrick O’Malley this afternoon said the company expects PC unit demand to grow 15%-20% in 2010 - and adds that the only think preventing faster growth might be industry production constraints.
O’Malley made the comments after the disk-drive company this afternoon posted December quarter results that blew away Street expectations - and then followed up with March quarter guidance that was equally impressive.
In an interview with Tech Trader Daily, O’Malley said several factors contributed to the big December quarter. For one thing, he says, the company has revised its product portfolio; he notes that a year ago the company had a product mix that didn’t match well with end market demand. He also notes that the company during the quarter shifted production to its highest capacity drives to meet demand in the notebook, desktop, enterprise and retail markets; the shift to high-end SKUs helped the company post gross margins that well exceeded the company’s previous forecasts.
O’Malley reports that the company has now seen two straight quarters of growth from its enterprise segment, but also notes that it is the only market Seagate serves that has not recovered to pre-downturn volume levels. He says a rebound to pre-recession levels is likely this year, though, and notes that the pick up in enterprise sales in Q4 reflected more than the usual year-end IT budget flush.
To respond to the increasing demand, Seagate said on the post-earnings conference call this afternoon that it now expects $750 million in capital spending for the June 2010 fiscal year, higher than the $650 million the company had forecast in October - and the $450 million the company had forecast at the beginning of the year. O’Malley says the company intends to add enough capacity to support sales of 60 million units in next year’s December quarter; the company sold just under 50 million units in the latest quarter.
O’Malley says Seagate now expects calendar year industry unit demand for 2010 of 650 million to 670 million units; that compares to 554 million in 2009 - that would be 19% growth at the midpoint of the forecast.
On the outlook for gross margins, the CFO says the company is not necessarily expecting to stay over the 30% level, but he does say that the company expects to operate above its target range of 22%-26% throughout the year.
STX in late trading is up $1.87, or 10.5%, to $19.60.
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Seagate Sees FY Q3 Revs, EPS Well Above Street; Says Old FY 2010 Gudiance Too Low
By Eric Savitz
Seagate (STX), which today posted much better than expected results for the December quarter, this afternoon issued guidance for its fiscal third quarter ending March which likewise is well above Street expectations.
The company sees industry unit demand for the quarter of 155 million to 160 million, with revenue of $2.9 billion to $3.1 billion, and GAAP EPS of 88-92 cents. The Street had been expecting revenue of $2.72 billion and EPS of 56 cents.
Seagate also said that the company’s old guidance of revenue for the June 2010 fiscal year of $10.5 billion with non-GAAP EPS of $2.20 a share is clearly too low, although they did not provide specific new full year guidance.
STX in late trading is up $1.46, or 8.2%, to $19.22.
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