Seagate Builds Momentum With Earnings

Seagate Technology PLC (NASDAQ: STX) released its fiscal first-quarter financial results before the markets opened on Friday. The company had $0.54 in earnings per share (EPS) on $2.90 billion in revenue, which compares to consensus estimates from Thomson Reuters that call for EPS of $0.50 and $2.92 billion in revenue. The same period from the previous year had $1.34 in EPS on revenue of $3.78 billion.

During the first quarter, the company reported gross margin of 24.2% and a net income of $165 million.

In this quarter, Seagate paid cash dividends of $163 million and repurchased approximately 20 million ordinary shares for $983 million. Also the board approved a quarterly cash dividend of $0.63 per share, which will be payable on November 20 to shareholders of record as of the close of business on November 6.

During the first quarter, the company generated approximately $824 million in operating cash flow. Cash, cash equivalents and short-term investments totaled approximately $1.9 billion at the end of the quarter.

Steve Luczo, Seagate’s chairman and CEO, commented on earnings:

During the quarter, we made solid progress against our core initiatives to bolster our product portfolio, contain costs and return capital to shareholders. While lower than planned nearline enterprise demand temporarily impacted our financial results, we are pleased with the momentum we have across our products, which will be further supported by the newly acquired assets of Dot Hill and our ability to now completely integrate the Samsung hard drive business. As we look forward, we are focused on delivering storage solutions for a significant range of existing, growing and emerging areas, and believe we have the right strategy and portfolio to deliver value to shareholders.

Shares of Seagate closed Thursday down 3.3% at $38.06, with a consensus analyst price target of $46.79 and a 52-week trading range of $36.80 to $69.40. Following the release of the earnings report, shares were relatively flat at $38.06 in early trading indications on Friday.

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