Seagate Technology plc
) reported fourth-quarter 2013 earnings per share of $1.20, which
exceeded the Zacks Consensus Estimate of $1.19.
Seagate reported revenues of $3.40 billion in the fourth
quarter of 2013, down 23.6% from $4.48 billion in the year-ago
period. The company faces stiff competition from its peers who
continue to tighten their grip on the market. Moreover, the Hard
Disk Drive (HDD) industry continues to suffer lack of consistent
visibility due to weak customer response globally.
This has curbed Seagate's ability to generate meaningful
growth. In order to counter these adverse effects and improve its
performance, the company is adopting strategies like product
launches and market segmentation.
Gross profit was $939.0 million, down from $1.48 billion in
the prior-year quarter. Gross margin was 27.4% versus 33.1% in
the prior-year quarter. The decline in gross margin was primarily
due to lower pricing environment leading to lower revenue
Operating margin in the quarter also moved down 13.1% year
over year from 23.6% reported in the year-ago quarter.
On a GAAP basis, net income was $348.0 million or 94 cents per
share, compared with $1.01 billion or $2.37 per share in the
comparable quarter last year. Excluding the impact of one-time
items, adjusted net income was $447.0 million or $1.20 per
Balance Sheet, Cash Flow
Cash and cash equivalents were approximately $2.19 billion at
the end of the quarter versus $1.90 billion in the previous
quarter. Accounts receivables increased to $1.67 billion from
$1.56 billion in the prior quarter. Seagate's long-term debt
stood at $2.77 billion up from $2.47 billion.
Seagate generated $394.0 million from operating activities,
down from $678 million in the previous quarter. In the reported
quarter, the company returned $137.0 million to shareholders
Seagate reported mixed fourth-quarter results, with revenues
decreasing substantially and earnings per share exceeding the
Zacks consensus. The lack of visibility in the HDD industry and
declining price environment are also concerns for the
Despite the ongoing cost control measures, the company has not
been able to support its margins. Although the cash position of
the company improved, but the debt position declined. 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).
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