Seagate Earnings Carrying On (STX, WDC)

October 16, 2007 by Douglas A. McIntyre

Seagate Technology (NYSE:STX) reported disc drive unit shipments of 47 million, revenue of $3.3 billion, diluted net income per share of $0.64 for the quarter ended September 28, 2007. Its non-GAAP EPS was $0.69. Included in both GAAP and non-GAAP results are restructuring charges of approximately $5 million or approximately $0.01 per share.  First Call had estimates at $0.64 for non-GAAP EPS & $3.22 Billion in revenues.  For the December quarter, Seagate sees non-GAAP EPS at $0.71 to $0.75 ($0.69 estimate) and sees revenue of $3.4 to $3.5 billion (estimate is $3.4 Billion).

Seagate maintained its quarterly dividend of $0.10 per share and it took delivery of approximately 10.3 million common shares related to its share repurchase plan at an average price of $24.27. The company has authorization to purchase approximately $725 million of additional shares under the current stock repurchase program.

Seagate didn’t see much trading activity initially, but shares are indicated up over 1.5% at $26.85 after closing down 1.6% at $26.45 today.  Shares have traded in a $20.10 to $28.51 over the last year.  We’ll have to see if these charges throw any wrench in the trading machines out there, but this looked fine on the surface.  Our own BAIT SHOP stock, a Special Situation Investing Newsletter pick for subscribers, is competitor Western Digital (NYSE:WDC) and it hasn’t seen any trades in after-hours trading.

"Our strong performance in the quarter reflects favorable industry conditions as well as the competitive strength of Seagate’s unique platform and commitment to innovation," said Bill Watkins, Seagate chief executive officer. "The first fiscal quarter has historically been a strong one for Seagate, and this year, we benefited from unit demand greater than expected. We believe we are well positioned to continue driving year-over-year revenue growth, and these record quarterly results demonstrate the effectiveness of Seagate’s business model."

Jon C. Ogg
October 16, 2007