Seagate: Fiscal 3Q13 Financial Results

(in US$ million)	3Q12	3Q13	9 mo. 12	9 mo. 13
Revenues	4,450	3,526	10,457	10,927
*Growth*		-21%		4%
Net income (loss)	1,146	416	1,849	1,490

Seagate Technology plc reported financial results for the quarter ended March 29, 2013.

During the fiscal third quarter, the company reported revenue of approximately $3.5 billion, gross margin of 26.9%, net income of $416 million and diluted earnings per share of $1.13. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 27.6%, net income of $464 million and diluted earnings per share of $1.26.

The company generated $678 million in operating cash flow, repurchased three million ordinary shares for approximately $102 million and paid $379 million for the early redemption of long-term debt. For the first nine months of the fiscal year, the company has returned 75% of its operating cash flow to shareholders in dividends and share redemptions. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2 billion at the end of the fiscal third quarter.

"Seagate’s operational results this quarter again reflect strong execution," said Steve Luczo, Seagate’s chairman, president and CEO. "The continued advancement of cloud, mobile and open source computing are trends that are shifting data volumes toward personal and corporate cloud environments, creating tremendous opportunities for Seagate’s leading storage technology portfolio. Looking ahead, our top priorities are focused on the efficiency of our operations, extending our leadership in storage technology innovation and returning value to shareholders."

Quarterly Cash Dividend
The board of directors has approved a quarterly cash dividend of $0.38 per share, which will be payable on May 29, 2013 to shareholders of record as of the close of business on May 15, 2013. 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

Calendar 1Q13 was flat in number of worldwide HDD shipped from 4Q12, 136 million by the three remaining manufacturers, and it seems that we are now reaching a plateau after years of growth.

This period was not a great one for Seagate with lower sequential figures in revenue (-4%), net income (-19%) and units (-4%).

Commenting the 3FQ13 of WD, we wrote:" But the surprise is the fast progression of the enterprise units shipped (up 9% Q/Q). HGST did a good job and is probably taking market share to rival Seagate - wait for the publication of the financial results of Seagate for confirmation." The reality is that Toshiba was the company with the fastest growing ratio in enterprise HDDs during the three-month period, not Seagate at only 2%.

Below is a comparison of the two HDD giants, leader WD, ≠2 Seagate, the third one being Toshiba, much smaller but the big winner of the first three months of 2013 with units shipped increasing around 8.8% sequentially, according to Trendfocus, to be compared with 1.6% for WD and -4.2% for Seagate.

Seagate vs. WD in 3FQ13

Seagate

Ratio
WD/Seagate

Revenue*

3,526

3,764

Net income*

391

416

Total cash*

2,000

4,100