- Company ships record exabyte capacity
with average capacity per drive up 46% year-over-year
Seagate Technology plc (NASDAQ: STX) (the “Company”) today
announced selected preliminary financial information for its fiscal
fourth quarter and year- end 2016, which ended on July 1, 2016.
Seagate expects to report revenue of approximately $2.65 billion,
gross margin of 25% and non-GAAP gross margin of approximately
25.8% for the fiscal fourth quarter 2016. The Company expects to
report HDD unit shipments of approximately 37 million, reflecting
approximately 62 exabytes, average capacity per drive of 1.7
terabytes and average selling price per unit of $67 for the fiscal
fourth quarter 2016.
These preliminary results compare to the Company’s previous
forecast for fiscal fourth quarter 2016 revenue of approximately
$2.3 billion and non-GAAP gross margin of approximately 23%. The
difference in the Company’s revenue from its forecast was driven
primarily by better than expected demand for the Company’s HDD
product portfolio. The difference in the Company’s gross margin
from its forecast was driven by better than expected demand for the
Company’s enterprise HDD portfolio and cost containment execution.
Non-GAAP operating expenses for the fiscal fourth quarter are
expected to be approximately $440 million, in line with forecast
expectations.
“The evolution of mobile and cloud data driven environments
continues to define itself as requiring significant amounts of mass
storage. HDD devices are where most data bits ultimately reside and
our record HDD exabyte shipments in the June quarter, particularly
due to enterprise demand, continue to support this thesis,” said
Steve Luczo, Chairman and Chief Executive Officer.
Luczo continued, “We believe the long-term trend of exabyte
storage demand growth exceeding HDD areal density growth remains
intact for the foreseeable future. Seagate will continue to evolve
its product offering, technology investment and manufacturing
footprint to best serve our customers with the world’s most
advanced and cost advantaged HDD products."
In addition to the Company’s restructuring actions announced
June 29, 2016, the Company announced today an additional
restructuring plan for continued consolidation of its global
footprint across Asia, EMEA and the Americas. The plan includes
reducing the Company’s global headcount by approximately 6,500
employees, or 14% of its global headcount by the end of fiscal year
2017. The total pretax charges for the plan will be approximately
$164 million in fiscal year 2017. The restructuring activities and
global footprint consolidation underway should enable the Company
to be operating within its targeted Non-GAAP product gross margin
range of 27-32% by the December 2016 quarter.
Conference Call Details for Fiscal Fourth Quarter and
Year-End 2016 Financial Results
Seagate will report its fiscal fourth quarter and year-end 2016
financial results before the market opens on Tuesday, August
2, 2016. The investment community conference call to discuss these
results will take place that day at 6:00
a.m. Pacific/9:00 a.m. Eastern Time. The live event can
be accessed online at Seagate’s Investor Relations website at
www.seagate.com/investors.
An archived audio webcast of this event will be available
shortly following the event conclusion.
About Seagate
To learn more about the company’s products and services, visit
www.seagate.com and follow us on Twitter, Facebook, LinkedIn,
Spiceworks, YouTube and subscribe to our blog. The contents of our
website and social media channels are not a part of this
release.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, each as
amended, including, in particular, statements about the
Company’s plans, strategies and prospects and estimates of
industry growth for the fiscal quarter ended July 1,
2016 and beyond. These statements identify prospective
information and may include words such as “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“projects” and similar expressions. These forward-looking
statements are based on information available to the Company as of
the date of this report and are based on management’s current views
and assumptions. These forward-looking statements are conditioned
upon and also involve a number of known and unknown risks,
uncertainties, and other factors that could cause actual results,
performance or events to differ materially from those anticipated
by these forward-looking statements. Such risks, uncertainties, and
other factors may be beyond the Company’s control and may pose a
risk to the Company’s operating and financial condition. Such risks
and uncertainties include, but are not limited to: items that may
be identified during its financial statement closing
process that cause adjustments to the estimates included in this
report; the uncertainty in global economic conditions; the impact
of the variable demand and adverse pricing environment for disk
drives, particularly in view of current business and economic
conditions; the Company’s ability to successfully qualify,
manufacture and sell its disk drive products in increasing volumes
on a cost-effective basis and with acceptable quality, particularly
the new disk drive products with lower cost structures; the impact
of competitive product announcements; the Company’s ability to
achieve projected cost savings in connection with restructuring
plans; possible excess industry supply with respect to particular
disk drive products; disruptions to its supply chain or
production capabilities; unexpected advances in competing
technologies; the development and introduction of products based on
new technologies and expansion into new data storage markets;
currency fluctuations that may impact the Company’s margins and
international sales; cyber-attacks or other data breaches that
disrupt its operations or results in the dissemination of
proprietary or confidential information; and fluctuations in
interest rates. Information concerning risks, uncertainties and
other factors that could cause results to differ materially from
the expectations described in this report is contained in the
Company’s Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission on August 11, 2015, the
“Risk Factors” section of which is incorporated into this report by
reference, and other documents filed with or furnished to the
Securities and Exchange Commission. These forward-looking
statements should not be relied upon as representing the Company’s
views as of any subsequent date and the Company undertakes no
obligation to update forward-looking statements to reflect events
or circumstances after the date they were made.
The inclusion of Seagate’s website address in this press release
is intended to be an inactive textual reference only and not an
active hyperlink. The information contained in, or that can be
accessed through, Seagate’s website is not part of this press
release.
Use of non-GAAP financial
information
The Company uses non-GAAP measures of gross margin and operating
expenses which are adjusted from results based on GAAP to exclude
certain expenses, gains and losses. These non-GAAP financial
measures may be provided to enhance the user’s overall
understanding of the Company’s current financial performance and
its prospects for the future. Specifically, the Company believes
non-GAAP results provide useful information to both management and
investors as these non-GAAP results exclude certain expenses, gains
and losses that it believes are not indicative of its core
operating results and because it is consistent with the financial
models and estimates published by financial analysts who follow the
Company.
These non-GAAP results are some of the primary measurements
management uses to assess the Company’s performance, allocate
resources and plan for future periods. Reported non-GAAP results
should only be considered as supplemental to results prepared in
accordance with GAAP, and not considered as a substitute for, or
superior to, GAAP results. These non-GAAP measures may differ from
the non-GAAP measures reported by other companies in its
industry.
For the ThreeMonths EndedJuly 1,
2016 Reconciliation of Preliminary GAAP Gross Margin:
Preliminary GAAP Gross Margin 25 % Non-GAAP adjustments:
(A)
1 % Preliminary non-GAAP Gross Margin 26 %
____________
(A) Gross margin has been adjusted on a non-GAAP
basis to exclude amortization of intangibles associated with
acquisitions, write off of certain fixed assets and cost of
sales associated with our disposed data services business,
offset by exclusion of favorable adjustments to sales return
provisions for certain discontinued products.
For the ThreeMonths EndedJuly 1,
2016 Reconciliation of Preliminary Operating Expense:
Preliminary GAAP Operating Expense $ 555 Non-GAAP adjustments:
Product Development
(A) (5 ) Marketing and administrative
(B) (2 ) Amortization of intangibles
(C) (28 )
Restructuring and other, net
(D) (80 ) Preliminary non-GAAP
Operating Expense $ 440
____________
(A) Product development expense has been adjusted on
a non-GAAP basis to exclude the impact of integration costs
associated with acquisitions and write off of certain fixed
assets.
(B) Marketing and administrative expense has been
adjusted on a non-GAAP basis primarily to exclude the write off of
certain fixed assets.
(C) Amortization of intangibles primarily related to
our acquisitions has been excluded on a non-GAAP basis.
(D) Restructuring and other, net, has been adjusted
on a non-GAAP basis primarily related to a reduction in our work
force as a result of our ongoing focus on cost efficiencies in all
areas of our business.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160711006303/en/
Seagate Technology plcEric DeRitis,
408-658-1561eric.deritis@seagate.com
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