Seagate Technology plc
) reported second-quarter 2013 earnings per share (EPS) of $1.38,
which exceeded the Zacks Consensus Estimate of $1.27.
Seagate reported revenues of $3.67 billion in the second
quarter of 2013, up 14.7% from $3.20 billion in the year-ago
period. The company's hard disk drive demand is improving based
on a marginal increase in demand from the server and pc
Gross profit was $992.0 million, down from $1.01 billion in
the prior-year quarter. Gross margin was 27.0% versus 31.6% 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 income in the quarter also moved down 8.3% year over
year to $555.0 million. This was due to a surge in cost and
expenses, which increased 20.2%, compared with the year-ago
On a GAAP basis, net income was $492.0 million or $1.30 per
share, compared with $563.0 million or $1.28 per share in the
comparable quarter last year. Excluding the impact of one-time
items, adjusted net income was $523.0 million or $1.38 per
Balance Sheet, Cash Flow
Cash and cash equivalents were approximately $1.87 billion at
the end of the quarter versus $2.37 billion in the previous
quarter. Accounts receivables decreased to $1.65 billion from
$1.68 billion in the prior quarter. Seagate's long-term debt
remained at $2.82 billion.
The company generated $844.0 million from operating
activities, down from $1.13 billion in the previous quarter. The
company has returned $1.1 billion to shareholders through share
redemptions and dividends.
Seagate reported decent second-quarter results, with revenue
improving substantially and EPS exceeding our expectation. Some
recovery in the HDD industry and improvement in demand aided
Seagate to become the leading player in the market.
The company has been able to control costs and increase the
sale of high-margin products. 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). We recommend
investors to consider other data storage devices stocks that are
) has Zacks Rank #2 (Buy).
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