Seagate Technology (NASDAQ: STX), the world's largest maker of hard-disk drives, is scheduled to release its fiscal first-quarter earnings after the closing bell on Thursday, October 21, 2010. Analysts, on average, expect the company to report earnings of 46 cents per share on revenue of $2.73 billion. In the year ago period, the company reported earnings of 58 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 fourth-quarter, the Dublin, Ireland-based company's net income was $379.00 million, or 76 cents per share, compared to a net loss of $83.00 million, or 17 cents per share, in the corresponding quarter last year. Revenue grew to $2.66 billion from $2.35 billion. Analysts, on average, expected the company to report earnings of 77 cents per share on revenue of $2.85 billion. Seagate said it shipped almost 47 million drives in the quarter, and reported gross margins of 27.4%.
For the fiscal first-quarter, the company expects revenue of $2.7 billion to $2.9 billion and gross margin as a percent of revenue at or near the low end of our target range of 22% to 26%.
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 market research firm IDC, total hard drive shipments are expected to rise 16.7 percent to 650 million units this year.
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 35 percent since the beginning of the year.
Disclosure: Author doesn't own any of the stocks discussed here.
