Seagate Technology plc
) reported fourth quarter 2012 earnings per share of $2.41, missing
the Zacks Consensus Estimate of $2.51.
Seagate reported revenues of $4.48 billion in the fourth quarter
of 2012, up 56.8% from $2.86 billion in the year-ago period. The
company registered record shipments of 66 million units reflecting
a market share of around 42%.
Based on the extraordinary efforts of its supply chain units and
outstanding execution, the company extended its product portfolio
to a large customer base.
Gross profit was $1.48 billion compared with $551.0 million in
the prior-year quarter. Gross margin was 33.1% compared with 19.3%
in the prior-year quarter. The company was able to control its
costs during the quarter, which increased at a much lower rate
compared to revenue increase.
Operating income in the quarter skyrocketed 456.3% year over
year to $1.06 billion and was 23.6% of revenues from 190.0 million
or 6.7% of revenues in the year-ago quarter. This remarkable
improvement was on the back lower product development and
restructuring costs. This in turn led to lower operating expense,
which increased at a lower pace versus revenue increase.
On a GAAP basis, net income was $1.01 billion or $2.37 per
share, compared with $119.0 million or 27 cents per share in the
comparable quarter last year. Excluding the impact of one-time
items, adjusted net income was $1.03 billion or $2.41 per
Balance Sheet, Cash Flow
Cash and cash equivalents totaled approximately $1.71 billion at
the end of the quarter versus $1.64 billion in the previous
quarter. Accounts receivables decreased to $2.32 billion from $2.48
billion in the prior quarter. Seagate's long-term debt declined by
$89.0 million to $2.86 billion. The company possesses strong cash
generation ability and generated $3.26 billion from operating
Seagate reported a modest fourth quarter result, with revenue
improving substantially but EPS missing our expectation. We believe
that Seagate's weakness is short term. Full recovery in the HDD
industry and increasing demand will position Seagate as the leading
player in the market. Seagate has a significant exposure to
high-end corporate desktop and enterprise server markets compared
to its rival
Western Digital Corp.
Nevertheless, lackluster PC demand and increasing use of SSDs
will continue to hamper the demand for HDDs. But Seagate's growing
exposure in the Enterprise SSD market will help it generate healthy
revenues in fiscal 2012 and beyond, which in turn will improve
Currently, Seagate has a Zacks #3 Rank, implying a short-term
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