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Seagate CFO: We're Tapping Tablet Demand

Tickers in this article: STX

NEW YORK (TheStreet) -- Hard drive maker Seagate aims to offset the impact of a weak PC market by tapping into demand for tablets and super-skinny laptops, according to CFO Pat O'Malley.

"We are mindful that the PC market is challenged for a number of reasons," he said, during a phone interview with TheStreet. "Even with a soft PC market, we see ourselves with a product portfolio positioning to get into other areas of growth again -- for example, tablets and the thin and light notebooks that are coming out."

O'Malley pointed, in particular, to Seagate's launch last month of a 7-mm thin hybrid drive aimed at the notebook market and a 5-mm thin mobile drive for tablets.

"With the portfolio we recently launched, it sets us up really well for the second half of 2013," he added.

Earlier this week, Seagate reported fiscal fourth-quarter revenue of $3.4 billion, in line with Wall Street's estimate. Excluding items, the Cupertino, Calif.-based firm earned $1.20 a share, a penny above analysts' expectation. The company reported gross margins of 27.4% and 28%, respectively, on a GAAP and non-GAAP basis.

The finance chief told The Street he would have liked greater visibility into customers' demand pipelines during the quarter, but saw strength in a number of regions.

"The U.S. feels good -- the market feels strong and it's getting stronger," he said. "A lot of parts of Asia are the same way."

At the other end of the spectrum, though, Europe was "nothing to write home about," according to O'Malley, who also pointed to "a lot of mixed signals" in China.

Weighed down by a tough PC market, the total addressable hard drive market was 133 million units during the quarter, down from 157 million units in the same period last year. "It's clearly the PC-type products that are down," he said.

However, the CFO said the September quarter typically sees sequential growth, boosted by the likes of back-to-school, gaming, and even some pre-holiday shopping. During the quarter, O'Malley predicts a total addressable hard drive market of 135 million to 140 million units.

For its fiscal first quarter, Seagate expects revenue between $3.5 billion and $3.6 billion and a relatively flat gross margin. Analysts surveyed by Yahoo! Finance are looking for sales of $3.55 billion.

-- Written by James Rogers in New York.

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