Seagate Technology plc
) reported third-quarter 2013 earnings per share of $1.26, which
exceeded the Zacks Consensus Estimate of $1.19.
Seagate reported revenues of $3.53 billion in the third
quarter of 2013, down 20.8% from $4.45 billion in the year-ago
period. The Hard Disk Drive (HDD) industry continues to witness a
lack of consistent visibility due to weak customer response
This has curbed Seagate's ability to generate meaningful
growth. In order to counter these adverse effects, the company is
adopting strategies like new product introduction, market
segmentation to facilitate its business performance.
Gross profit was $948.0 million, down from $1.64 billion in
the prior-year quarter. Gross margin was 26.9% versus 36.9% in
the prior-year quarter. The decline in gross margin was primarily
due to an adverse effect on pricing as well as due to some cost
Operating margin in the quarter also moved down 13.2% year
over year from 27.2% reported in the year-ago quarter.
On a GAAP basis, net income was $416.0 million or $1.13 per
share, compared with $1146.0 million or $2.48 per share in the
comparable quarter last year. Excluding the impact of one-time
items, adjusted net income was $464.0 million or $1.26 per
Balance Sheet, Cash Flow
Cash and cash equivalents were approximately $1.90 billion at
the end of the quarter versus $1.87 billion in the previous
quarter. Accounts receivables decreased to $1.56 billion from
$1.65 billion in the prior quarter. Seagate's long-term debt
stood at $2.47 billion.
Seagate generated $678 million from operating activities, up
from $844.0 million in the previous quarter. In the reported
quarter, the company has returned $381 million to shareholders
For the fourth quarter, Revenue is expected to be in the range
of $3.3 billion to $3.45 billion, non-GAAP operating expenses to
remain relatively flat.
Seagate reported mixed third-quarter results, with revenue
decreasing substantially and EPS exceeding our expectation. The
lack of visibility in the HDD industry is also a concern for the
Despite the ongoing cost control measures, the company has not
been able to support its margins. Moreover, Seagate is coming up
with new products to cater to new customers and penetrate new
markets with customized products. Seagate also has a significant
exposure to high-end corporate desktop and enterprise server
markets, compared with its rival
Western Digital Corp.
Currently, Seagate has a Zacks Rank #3 (Hold).
Investors can also consider companies like
) with a Zacks Rank #1 (Strong Buy) and
) with a Zacks Rank #2.
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