Seagate to Miss Quarterly Sales Forecast by $500 Million
Hard drive manufacturer Seagate said a supply quality issue and a slower-than-expected rate of market share growth have combined to cause it to miss its quarterly sales target by a half-billion dollars. The company said it expects revenue of $4.5 billion for the quarter, $500 million short of what it had previously forecast.
Seagate, which last month said it would acquire the privately held retail hard drive maker LaCie, also said its gross margins on a non-GAAP basis will be lower than expected, by nearly a full percentage point. Its shares fell by 64 cents, or more than 2.5 percent, in after-hours trading to $24.44, after closing at $25.08 during the regular session. The shares have increased by more than 55 percent this year.
Seagate had been positioned to make out like crazy when the flooding in Thailand last year disrupted the hard drive industry’s supply chain; its CEO played up the crisis for all it was worth. It wasn’t as bad as it could have been, but it was a disruption, and Seagate benefited from less exposure to the affected regions than Western Digital, its primary competitor. Most of the rise in its share price over the last several months can be attributed to that.
The industry didn’t exactly face doomsday, and so Seagate didn’t expand its share of the market quite as fast as it had expected.