Seagate Expected Revenue for 1FQ16: Only $2.9 billion

Seagate Technology plc announced selected preliminary financial information for its fiscal first quarter of 2016, which ended on October 2, 2015.

Seagate expects to report revenue of approximately $2.9 billion and non-GAAP gross margin of approximately 24% for the fiscal first quarter 2016. The company expects to report unit shipments for the fiscal first quarter of approximately 47 million and maintaining approximately 40% market share.

These preliminary results compare to the company’s previously forecasted range for fiscal first quarter of revenue of $2.9 to $3.1 billion and non-GAAP gross margin of approximately 27%. The difference in the company’s non-GAAP gross margin from its forecast was driven primarily by lower than expected intra-quarter demand for the company’s 4TB and 6TB nearline HDD products. Seagate announced its 8TB nearline HDD products in September and expects to increase its market participation in this growth segment over the next several quarters.

“While Seagate had strong operating cash flows and made significant progress in cost containment in the September quarter, we are disappointed we did not execute a product portfolio that fully addressed the demand in the nearline market,” said Steve Luczo, Seagate’s chairman and CEO. “Looking ahead, we are confident that our nearline product portfolio will be fully competitive by our fiscal third quarter.”

Non-GAAP operating expenses for the fiscal first quarter are expected to be approximately $500 million, below previously forecasted non-GAAP operating expenses of approximately $515 million due to better cost containment.

First fiscal quarter cash flow from operations is expected to be approximately $800 million. During the quarter, the company redeemed approximately 20 million shares and cash, cash equivalents, restricted cash and short term investments totaled approximately $1.9 billion at the end of the quarter.