Seagate Earnings: Revenues, Margins Fall Due To Low Shipments Across Divisions

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Seagate Technology

Seagate (NASDAQ:STX) announced Q3 FY 2016 results, reporting a 22% decline in net revenues to just under $2.6 billion. [1] The company’s gross margin (GAAP) fell by over 8 percentage points to 20.2% for the quarter while the non-GAAP gross margin was down by about 3 percentage points to about 23%. As a result, the company’s reported net income and non-GAAP EPS were significantly lower than the comparable prior year period.

Q316 Earnings1 - Copy

Revenues were down primarily due to low shipments across various segments including PC, notebook, enterprise and branded products. [2]

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Q316 Earnings2Seagate witnessed particularly low demand for mission-critical enterprise hard disk drives (HDD) in the March quarter, which led to limited growth in the enterprise segment. [3] Enterprise storage systems and flash storage have been the growing segments within the company over the past few quarters.

Q316 Earnings3 copyThe company reported its preliminary set of Q3 FY 2016 results in early April. which led its stock to fall by over 20% in a week. Below you can see our full year revenue forecast for Seagate’s various divisions.

Q316 Earnings4

Have more questions about Seagate? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  Our Full Analysis For Seagate.

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Notes:
  1. Seagate Technology Reports Fiscal Third Quarter 2016 Financial Results, Seagate Press Release, April 2016 []
  2. Seagate Supplemental Fact Sheet, Seagate Press Release, April 2016 []
  3. Seagate Q3 2016 Earnings Call Transcript, Seeking Alpha, April 2016 []