Hard disk maker
) has revised its first-quarter sales estimate downward. The
company stated that lower demand for computer hard drives compelled
it to lower expectations. The company now expects first quarter
revenues to be in the range of $3.72 billion to $3.80 billion, a
sharp 5.0% to 7.0% decline from the prior forecast of $4.0
This downward revision from the hard disk manufacturer comes on
the back of falling demand for personal computers and other related
accessories. The fall in demand in turn is a result of weakness in
the economy and surge in demand for mobile computing devices like
Seagate is not the first one in this market to lower its sales
estimates. Its key rival,
Western Digital Corp
), had moved on the same line and reduced its fiscal first quarter
sales and total available market (TAM) estimates during the second
week of September. Separately,
), the largest maker of computer chips, also lowered its sales
guidance for the third quarter of 2012.
Industry experts also expect the weakness in PC demand to have a
significant impact on the overall market for hard disks.
Previously in July, Seagate had reduced its fourth quarter
guidance as well. Given the number of customers affected by the
macro slowdown, Seagate now expects the addressable market to be
relatively flat sequentially. It is therefore adjusting its
production and inventory planning accordingly.
Full recovery in the HDD industry and increasing demand will
position Seagate as the leading player in the market. Seagate has
larger exposure to high-end corporate desktop and enterprise server
markets than its rivals.
While lackluster PC demand and increasing use of SSDs will
continue to pressure HDDs, Seagate's growing exposure in the
Enterprise SSD market may provide some cushion.
Currently, Seagate has a Zacks #3 Rank, implying a short-term
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