Seagate: Fiscal 2Q13 Financial Results
Net and revenue down sequentially as WD, but HDDs shipped increasing
This is a Press Release edited by StorageNewsletter.com on January 29, 2013 at 2:51 pm| (in US$ million) | 2Q12 | 2Q13 | 6 mo. 12 | 6 mo. 13 |
| Revenues | 3,195 | 3,668 | 6,007 | 7,400 |
| Growth | 15% | 23% | ||
| Net income (loss) | 563 | 492 | 703 | 1,074 |
Seagate Technology plc reported financial results for the quarter ended December 28, 2012.
During the fiscal second quarter, the company reported revenue of approximately $3.7 billion, shipping 58 million units.
On a GAAP basis, Seagate reported gross margin of 27.0%, net income of $492 million and diluted earnings per share of $1.30. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 27.6%, net income of $523 million and diluted earnings per share of $1.38. Cash flow from operations in the quarter was $844 million and the company returned $1.1 billion to shareholders in dividends and share redemptions. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.0 billion at the end of the fiscal second quarter.
"Seagate is executing well in an environment where customer demand forecasting is challenging," said Steve Luczo, Seagate’s chairman, president and CEO. "Looking ahead, we will continue to manage our business conservatively to the demand environment, focus on profitability and effectively invest for market leadership in storage for mobility, cloud and open source. Creating value for shareholders remains a top priority, and in the first half of fiscal 2013, we returned over 95% of operating cash flows through share redemptions and dividends."
Quarterly Cash Dividend
The board of directors approved an increase in our quarterly cash dividend to $0.38 per share which was paid on December 28, 2012, rather than in the March 2013 quarter. The payment of any future quarterly dividends will be at the discretion of the board and will be dependent upon Seagate’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the board.
Comments
During the quarter, the industry is estimated to have shipped 135 million HDDs representing 105EB. Within this, Seagate sold 58.2 million drives representing 43% market share and over 47EB. Average capacity per drive was 823GB. This reflects a 59%
Y/Y exabyte growth, which is well over twice the current rate
of areal density growth.
As a result of the addition of the Samsung's HDD business and LaCie, the company recognized a non-cash $37 million expense for amortization of acquisition-related intangibles in the December quarter.
Seagate's OEM represented 67% of global sales, distribution 21% and retail 12%.
HDDs shipped by category from Seagate
(in million of units)
| 1FQ13 |
2FQ13 |
Q/Q growth |
|
| Enterprise | 6.3 | 7.3 | 16% |
| Client compute | 40.7 | 39.2 | -4% |
| Non compute | 11.0 | 11.7 | 6% |
| Total | 58.0 | 58.2 | +0% |
As usual, we compare the results of Seagate and rival WD - the only two HDD makers with much smaller Toshiba - for the same period, here 2FQ13. The ranking continues to be same, WD beating its competitor in revenue and HDD shipped. That's the result of the acquisition of HGST by WD, being a much higher deal than the Seagate/Samsung HDD business. But this time, WD recorded lower net income. It's also largely the leader in mobile - the higher category in units shipped -, CE HDDs and branded devices, but far from Seagate for enterprise and desktop devices.
Seagate vs. WD in 2FQ13
| Seagate |
WD | Ratio WD/Seagate |
|
| Revenue* | 3,668 | 3,824 | 4% |
| Net* | 492 | 335 | -32% |
| Revenue expected next quarter* |
3,250 to 3,450 |
3,550 to 3,650 |
+6% to +9% |
| Type of HDDs** | |||
| Enterprise | 7.3 | 6.6 | -10% |
| Mobile | 17.3 | 21.3 | +23% |
| Desktop | 21.9 | 17.7 | -19% |
| CE drives |
5.6 | 6.5 | +16% |
| Branded HDDs | 6.0 | 7.1 | +18% |
| Total | 58.2 | 59.2 | +2% |
** in million
Abstracts of the earnings call transcript:
Steve Luczo, chairman, president and CEO:
"Our business environment continues to be impacted by a wide range of macroeconomic, spending and demand challenges. Industry shipments declined 3% sequentially in the December quarter to approximately 135 million units. This decline was primarily driven by the notebook market as all other segments demonstrated quarter-over-quarter growth.
"Gross margins for the December quarter were 27.6% within both our expectations and our long-term margin range target.
"We expect to maintain gross margins at the lower end of our long term range of 27% to 32%
"For the March quarter, unit shipments in the first few weeks of the month of January have been linear and have trended higher than the beginning of the December quarter. Our outlook reflects an addressable market that is flat to down sequentially, and we are currently forecasting March quarter revenues of approximately $3.25 billion to $3.45 billion."
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