Seagate Confirms Loss of No. 1 Position on HDD Market

Seagate Earns Record Revenues, Profits amid Lower-Than-Expected Shipments

by Anton Shilov
07/31/2012 | 08:44 PM

Seagate Technology has confirmed that shipments for the fourth quarter of fiscal year 2012 (ended June 29, 2012) were record 66 million (42% of the market), which is slightly lower than the company had expected previously. Thanks to increased shipments amid high average selling prices, the company reported record revenues and profitability both for Q4 FY 2012 as well as for the whole fiscal year.

 

“As we announced previously, we were disappointed not to meet our revenue and margin plan for the fourth quarter as a result of the industry’s faster recovery from the supply chain disruption and an isolated supplier issue that we experienced. Nevertheless, we are pleased to have achieved record revenue and unit shipments for the June quarter, which enabled Seagate to continue to return significant value to shareholders through dividends and share repurchases,” said Steve Luczo, Seagate chairman and chief executive officer.

During the fourth quarter, on a GAAP basis the company reported revenue of approximately $4.5 billion, gross margin of 33.1%, net income of $1.0 billion and diluted earnings per share of $2.37. For the fiscal year ended June 29, 2012, on a GAAP basis Seagate reported revenue of $14.9 billion, gross margin of 31.4%, net income of $2.9 billion and diluted earnings per share of $6.49.

As previously reported, Seagate experienced an isolated supplier issue in one of its mission-critical products that impacted its enterprise business by preventing it from shipments of 1.5 million hard disk drives. The reason of the problem "was a particle contaminant coming from a supplier the levels down in the supply chain", which resulted in a long investigation of the issue. By now, the issue has been resolved and shipments of the product have resumed.

Due to increased shipments of hard disk drives by Western Digital and its HGST subsidiary, who collectively sold 71 million of hard drives, Seagate lost its unit and revenue market share leadership that it held in the recent quarters.