Company ships record exabyte capacity with
average capacity per drive up 46% year-over-year
Seagate Technology plc (the “Company”) today announced selected
preliminary financial information for its fiscal first quarter
2017, which ended on September 30, 2016. Seagate expects to report
revenue of approximately $2.8 billion, and GAAP and non-GAAP gross
margin of approximately 29%. The Company expects to report HDD
exabyte shipments of approximately 67 exabytes, reflecting unit
shipments of approximately 39 million and average capacity per
drive of 1.7 terabytes.
These preliminary results compare to the Company’s previous
forecast for fiscal first quarter 2017 revenue of at least $2.7
billion and non-GAAP gross margin of at least 27%. The strength in
the Company’s revenue and gross margin for the quarter was driven
primarily by better than expected demand for the Company’s high
capacity enterprise HDD product portfolio. Previously announced
cost containment measures and restructuring actions continue to
progress as planned. GAAP and Non-GAAP operating expenses for the
September quarter are expected to be approximately $580 million and
$470 million respectively, increasing sequentially from the June
quarter primarily due to higher variable compensation related to
better financial performance. The Company ended the quarter with
approximately $1.5 billion in cash and cash equivalents.
“This quarter we returned to our long-term targeted margin
profitability and operating income ranges and generated significant
cash flow from operations,” said Steve Luczo, chairman and chief
executive officer. “Our strong results reflect persistent growth
and demand for cloud-based storage exabyte capacity and our new
high capacity HDD products are gaining traction in the marketplace.
At the same time, we are refreshing our full HDD product portfolio
with cost optimized products and our organization continues to
execute our company-wide restructuring and cost containment
activities.
“With the ever-growing demand for HDD storage capacity and our
focus on providing the most comprehensive product portfolio with
leading technology, Seagate should continue to deliver solid
financial performance and strong shareholder return for the years
to come.”
Conference Call Details for Fiscal First Quarter 2017
Financial Results
Seagate will report its fiscal first quarter 2017 financial
results before the market opens on Wednesday, October 19, 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 ending December 30, 2016 and beyond.
These statements identify prospective information and may include
words such as “expects,” “intends,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “projects,” “should” 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; our ability to comply
with certain covenants in our credit facilities with respect to
financial ratios and financial condition tests ; 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 press release is contained in
the Company’s Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission on August 5, 2016, the
“Risk Factors” section of which is incorporated into this press
release 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 and social media channels are
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 EndedSeptember
30, 2016 Reconciliation of Preliminary GAAP Gross Margin:
Preliminary GAAP Gross Margin 29 % Non-GAAP adjustments: 0 %
Preliminary non-GAAP Gross Margin 29 %
For the
ThreeMonths EndedSeptember 30, 2016
(in millions)
Reconciliation of Preliminary Operating Expense: Preliminary GAAP
Operating Expense $ 580 Non-GAAP adjustments: Marketing and
administrative
(A) 1 Amortization of intangibles
(B)
(27 ) Restructuring and other, net
(C) (84 ) Preliminary
non-GAAP Operating Expense: $ 470
_____________
(A) Marketing and administrative expense has been
adjusted on a non-GAAP basis primarily to reflect the impact of our
disposed data services business.
(B) Amortization of intangibles primarily related to
our acquisitions has been excluded on a non-GAAP basis.
(C) Restructuring and other, net, has been adjusted
on a non-GAAP basis primarily related to reductions in our work
force as a result of our ongoing focus on cost efficiencies in all
areas of our business.
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version on businesswire.com: http://www.businesswire.com/news/home/20161011005479/en/
Seagate Technology plcEric DeRitis,
408-658-1561eric.deritis@seagate.com
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