Seagate Technology (NASDAQ: STX): Q4 Earnings Preview 2011

Seagate Technology PLC (NASDAQ: STX), the world's largest hard drive disk maker, is scheduled to release its fiscal fourth-quarter earnings after the closing bell on Wednesday, July 20, 2011. Analysts, on average, expect the company to report earnings of 24 cents per share on revenue of $2.70 billion. In the year ago period, the company reported earnings of 70 cents per share on revenue of $2.66 billion.

Seagate Technology engages in the design, manufacture, marketing, and sale of hard disk drives for the enterprise, mobile computing, desktop, consumer electronics, and branded solutions market applications of the disk drive industry in North America, the Far East, and Europe. The company sells its disk drives primarily to major original equipment manufacturers (OEMs), distributors and retailers. In addition to manufacturing and selling disk drives, the company provides storage services for small- to medium-sized businesses, including online backup, data protection and recovery solutions.

In the preceding fiscal third-quarter, the Dublin, Ireland-based company's net income was $93 million, or 21 cents per share, compared to $518 million, or $1 per share, in the year-ago period. On an adjusted basis, the company earned 25 cents a share in the latest quarter. Revenue fell to $2.70 billion from $3.05 billion. Analysts, on average, expected the company to report earnings of 27 cents per share on revenue of $2.66 billion. 

In April, Seagate agreed to acquire Samsung Electronics' for $1.375 billion in equal measures of cash and stocks. As a result, Samsung Electronics will own approximately 9.6 percent of Seagate and get to nominate one new member to join Seagate's Board of Directors, while the two companies have further agreed to deepen their strategic relationship with related cross-licensing and supply stipulations. Samsung will provision Seagate's solid state drives with NAND flash memory, whereas Seagate will furnish Samsung's PCs and consumer electronics products with hard disk storage. The deal is expected to complete in full by year's end. Seagate expects the deal to "meaningfully" add to its earnings per share and cash flow in the first year, and said it plans no material restructuring costs.

The company has continued to benefit from strong demand for data storage hardware as more consumers create, share, and store increasingly rich digital content such as digital photographs, music, videos, and other multimedia files. The hard disk drive industry has also got a boost from improving corporate technology spending and increased interest in cloud services. 

However, industry experts believe that the demand for hard disk drives is likely to slow down due to the growing popularity of tablet PCs and other handheld devices. Typically, handheld devices like tablets use NAND flash memory instead of traditional hard disk drive for storage. Seagate is currently focusing primarily on enterprise-class solid-state drives.

To counter a slump in demand for hard disks, Seagate is working to develop alternatives, such as external devices that connect to tablets to deliver music and other content, and so- called hybrid drives, which contain components of both hard disks and the flash drives that are growing in popularity.

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Seagate Technology (NASDAQ: STX): Q3 Earnings Preview 2011

Seagate Technology PLC (NASDAQ: STX), the world's largest hard drive disk maker, is scheduled to release its fiscal third-quarter earnings after the closing bell on Tuesday, April 19, 2011. Analysts, on average, expect the company to report earnings of 27 cents per share on revenue of $2.66 billion. In the year ago period, the company reported earnings of $1.03 per share on revenue of $3.05 billion.

Seagate Technology engages in the design, manufacture, marketing, and sale of hard disk drives for the enterprise, mobile computing, desktop, consumer electronics, and branded solutions market applications of the disk drive industry in North America, the Far East, and Europe. The company sells its disk drives primarily to major original equipment manufacturers (OEMs), distributors and retailers. In addition to manufacturing and selling disk drives, the company provides storage services for small- to medium-sized businesses, including online backup, data protection and recovery solutions.

In the preceding fiscal first-quarter, the Dublin, Ireland-based company's net income was $150 million or $0.31 per share, compared to $533 million or $1.03 per share for the year-ago quarter. On an adjusted basis, the company earned 33 cents a share in the latest quarter. Revenue fell 10% to $2.72 billion from $3.03 billion. Analysts, on average, expected the company to report earnings of 33 cents per share on revenue of $2.72 billion.

Early this month, the hard disk drive maker said that it expects revenue of around $2.7 billion for the fiscal third quarter ended April 1, 2011.  For the quarter, the company expects unit shipments of 49 million and gross margin near or slightly above the high-end of the original outlook range of 18 to 19 percent. The company had shipments of 48.9 million and gross margin of 19.5 percent in the second quarter.

The company has continued to benefit from strong demand for data storage hardware as more consumers create, share, and store increasingly rich digital content such as digital photographs, music, videos, and other multimedia files. The hard disk drive industry has also got a boost from improving corporate technology spending and increased interest in cloud services.  Moreover, the hard-disk-drive sector is poised for a major consolidation after Western Digital unveiled a plan to buy Hitachi Global Storage Technologies. Meanwhile, according to media reports, outh Korean conglomerate Samsung Electronics Co. Ltd. too is seeking to sell its hard-disk drive business. 

However, industry experts believe that the demand for hard disk drives is likely to slow down due to the growing popularity of tablet PCs and other handheld devices. Typically, handheld devices like tablets use NAND flash memory instead of traditional hard disk drive for storage. Seagate is currently focusing primarily on enterprise-class solid-state drives.

To counter a slump in demand for hard disks, Seagate is working to develop alternatives, such as external devices that connect to tablets to deliver music and other content, and so- called hybrid drives, which contain components of both hard disks and the flash drives that are growing in popularity.

Among other developments, the company recently announced that its board of directors approved the payment of a quarterly cash dividend of 18 cents per share. The company will pay the dividend on June 1, to shareholders on record as of May 2. Seagate had suspended its dividend payout policy in April 2009, as the company’s fortunes plummeted along with the economy. Prior to that, Seagate used to pay a quarterly cash dividend of 3 cents per share. 

The company's stock currently trades at a forward P/E (fye Jul 2, 2012) of 8.91 and PEG ratio (5 yr expected) of 2.85. In terms of stock performance, Seagate shares have lost nearly 13 percent over the past year.

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Seagate Climbs On Renewed Takeover Chatter

Shares of Seagate Technology PLC (NYSE: STX) rose more than 1% Friday on renewed speculation that the company could be a takeover target. Seagate has been subject of many acquisition rumors in relation to several potential suitors for the past several months. The company designs, manufactures, markets, and sells hard disk drives for the enterprise, client compute, and client non-compute market applications in the United States and internationally. Stay tuned for more.

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Seagate Technology (NASDAQ: STX): Q2 Earnings Preview 2011

Seagate Technology PLC (NASDAQ: STX) is scheduled to release its fiscal second-quarter earnings after the closing bell on Wednesday, January 19, 2011. Analysts, on average, expect the company to report earnings of 33 cents per share on revenue of $2.72 billion. In the year ago period, the company reported earnings of $1.04 per share on revenue of $3.03 billion.

Seagate Technology engages in the design, manufacture, marketing, and sale of hard disk drives for the enterprise, mobile computing, desktop, consumer electronics, and branded solutions market applications of the disk drive industry in North America, the Far East, and Europe. The company sells its disk drives primarily to major original equipment manufacturers (OEMs), distributors and retailers. In addition to manufacturing and selling disk drives, the company provides storage services for small- to medium-sized businesses, including online backup, data protection and recovery solutions.

In the preceding fiscal first-quarter, the Dublin, Ireland-based company's net income was $149 million, or 31 cents a share, compared to $179 million, or 35 cents a share, in the year-ago quarter. On an adjusted basis, the company earned 37 cents a share in the latest quarter. Revenue rose 1.5% to $2.7 billion from $2.66 billion. Analysts, on average, expected the company to report earnings of 45 cents per share on revenue of $2.72 billion.

Late in November, the company ended talks with private equity firms regarding a going private deal, as it concluded that the valuation being offered was not in the best interest of the company and its shareholders.Seagate had announced in October that it had “received a preliminary indication of interest” regarding its plan to go private. Seagate also said that its board of directors has authorized the company to repurchase up to an additional $2 billion of its outstanding ordinary shares to boost shareholder value. The company also said that for its fiscal second-quarter it expects revenue to be at least $2.7 billion and gross margin of at least 19.5%. “Seagate management believes that the demand for hard disk drives has improved, and the current expectation for the total available market in the December 2010 quarter is approaching 170 million units,” the company said.

The company has continued to benefit from strong demand for data storage hardware as more consumers create, share, and store increasingly rich digital content such as digital photographs, music, videos, and other multimedia files. The hard disk drive industry has also got a boost from improving corporate technology spending and increased interest in cloud services. According to the market research firm iSuppli, HDDs are expected to receive a late-year boost during the holiday season as shipments rally during the final quarter. iSuppli says HDD shipments will reach an estimated 169.2 million units during the last three months of the year, up more than 2 percent from 165.5 million units in the previous quarter.

However, industry experts believe that the demand for hard disk drives is likely to slow down due to the growing popularity of tablet PCs and other handheld devices. Typically, handheld devices like tablets use NAND flash memory instead of traditional hard disk drive for storage. Seagate is currently focusing primarily on enterprise-class solid-state drives.

In terms of stock performance, Seagate shares have lost nearly 20 percent over the past year.

Full Disclosure: None.