Seagate Q1 EPS Tops Ests; Sees Big Impact From Thai Floods
10/20/2011 @ 4:56PM Eric Savitz
forbes.com
Seagate shares are trading modestly higher Thursday afternoon after the company posted better-than-expected profits for its fiscal first quarter ended September 30. But the company also warned that the drive industry is going to be badly disrupted for at least the next few quarters by the recent severe flooding in Thailand, home to large-scale production of both drives and related components. The comments come one day after rival Western Digital warned that due to production cutbacks in Thailand, it would see much lower shipments in the December quarter and likely beyond.
For the quarter, the hard-disk drive company reported sales of $2.8 billion, a hair below the Street consensus of $2.9 billion, with non-GAAP profits of 34 cents a share, ahead of the Street at 31 cents. The company sold 51 million drives in the quarter. Gross margin was 19.5%.
The company noted that “in light of the situation in Thailand,” where serious flooding has affected manufacturing of both drives and related components, “the company will provide limited guidance for the December quarter” on its call with investors later this afternoon.
In a comment posted on the company’s investors relations site, Seagate warned that the industry will be significantly affected by the floods in Thailand.
“Seagate’s component and drive assembly factories in Thailand are operational, accessible to all of its employees and are running at full production. As previously reported, this is not the case for some of the component suppliers. Our business priority is to work with our external component suppliers, supporting their efforts to rebuild the supply chain as quickly as possible. We expect to experience significant impact to our production levels while our suppliers work to get their businesses up and running.
Given the severity of the situation and the extensive supply constraints caused by the disruptions, including those described by our primary competitor, the effects on our industry are likely to be substantial and extend over multiple quarters. As strengthen our supply chain and optimize our output, we are engaged to customers to re-align build schedules, product mix and to reset delivery expectations”
STX in late trading is up 11 cents, at $12.17.
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