Seagate Stock Slides on Downbeat Forecast (Update 1)
This story has been updated with interview comments from Seagate CFO Pat O'Malley and after-hours share price.
NEW YORK (TheStreet) -- Seagate(STX) easily exceeded Wall Street's estimates. Still, investors were less than impressed with its outlook.
The hard-drive maker reported revenue of $3.7 billion, up from $3.2 billion in the prior year's quarter, comfortably above Wall Street's estimate of $3.58 billion. Seagate sold 58 million hard drives during the quarter, compared to 47 million in the same period last year.
Earlier this month, Seagate said it would report revenue of at least $3.6 billion, up from a previous forecast of about $3.5 billion.
Excluding items, Seagate earned $1.38 a share, compared to $1.32 a share in the prior year's quarter. Analysts surveyed by Thomson Reuters were looking for earnings of $1.27 a share.
"Seagate is executing well in an environment where customer demand forecasting is challenging," said Seagate CEO Steve Luczo, in a statement released after the market close.
The company's guidance, however, weighed heavily on its shares in extended trading. On the conference call to discuss its earnings, Seagate forecast revenue between $3.25 billion and $3.45 billion. Analysts surveyed by Thomson Reuters were looking for revenue of $3.48 billion.
"We're trying to give a conservative outlook, because our customers are giving us conservative input," said Pat O'Malley, the Seagate CFO, during a phone interview with TheStreet. Even with "muted visibility" from customers, though, Seagate will stay within its target margin, he added.
The company expects to be at the low end of its target margin range of 27% to 32% during its fiscal third quarter.
O'Malley said that the hard drive market has been under pressure from the PC slowdown and the recent upheaval of Microsoft'(MSFT) Windows 8, but noted that Seagate's flexible enough to cope with demand fluctuations.
"We're going to try to align ourselves with what the end business wants," he said. "If it's flat, we will deal with that - if it's up, we will go with that."
Seagate shares tumbled 5.24% to $35.45 in extended trading.
The Cupertino, Calif.-based firm exited the quarter with cash and investments of about $2 billion.
Seagate also announced an investment in Flash specialist Virident Systems, part of a deal to jointly deliver Flash-storage technology to enterprises. Seagate will also appoint one member to the Virident board as part of the agreement.
-- Written by James Rogers in New York
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