Seagate Slashes Quarter Revenue Forecast

Seagate Expects HDD Revenues to Drop by 5%-7%

by Anton Shilov
09/24/2012 | 11:31 PM

Seagate Technology, the world's second largest supplier of hard disk drives, has updated its revenue forecast for the quarter that ends this month. The company now expects demand towards its hard drives to be down 5% - 7% from the previously forecasted figure, the total available market of HDDs will also get lower than expected several month ago.

 

Late last week Seagate  provided an update on the quarter ending September 28, 2012  and the fiscal year ending June 28, 2013.  Seagate expects the industry’s total available market for hard drives in Q3 2012 to be approximately 140 million units and it expects to maintain 40% to 43% market share.  As a result, Seagate estimates revenue for the September quarter to be approximately 5% to 7% lower than its previous guidance of $4 billion. The company estimates its gross margin for the September quarter to be approximately 30%.

For fiscal year 2013, the Company expects to incur operating expenses, excluding cost of revenue, of approximately $400 million per quarter.  In addition, capital expenditures for fiscal year 2013 are expected to be approximately $750 million.

Seagate follows other high-tech companies, including arch-rival Western Digital Corp. as well as Intel Corp. with slashing of quarter revenue guidance. Just like the others, Seagate has to blame slow demand towards personal computers in well-developed countries.

It is interesting to note that unlike manufacturers of dynamic random access memory (DRAM), hard drive makers are reluctant to lower prices on hard disk drives in a bid to spur demand towards storage devices in the channel and in the retail.