Seagate Technology PLC (NASDAQ: STX) stock lost over 2.8% in the pre-market session of October 23rd, 2020 (Source: Google finance) after the company has lower earnings estimate for the first quarter of FY 21. The total hard drive capacity shipment was 114 exabytes in the September quarter, which declined about 2% sequentially. Mass capacity shipments were 87 exabyte compared to 91 exabyte in the prior quarter and 64 exabyte in the year ago period, which represents solid year-over-year growth. The outlook for the December quarter support calendar year 2020 exabyte shipment growth that is well ahead of the long-term demand CAGR of 35% to 40% forecasted for this market. On the revenue basis, mass capacity storage formed 58% of September quarter revenue, and 63% of hard disk drive revenue. Nearline shipments were 64 exabyte, which is down from record levels in June, but up 36% year-on-year, on the back of broad market demand for the high capacity nearline drives. The company estimates that about 16% of the nearline capacity shipment, are to replace existing drives, which equates to about 10 exabytes in the September quarter. Further, the revenue for VIA, rose sharply in the September quarter, as new security, as morbid installation resumed following the COVID-related pause the company described in the first half of the calendar year. The company expects healthy VIA sales over the near-term and view this application as a long-term growth driver for mass capacity storage, particularly new use cases for smart camera system and analytical software emerge. IDC forecast revenue from video security camera is growing at a compound rate of about 13% through 2025, which is a strong indication of the increasing storage needs at the edge.
STX in the first quarter of FY 21 has reported the adjusted earnings per share of 93 cents, beating the analysts’ estimates for the adjusted earnings per share of 88 cents, according to figures compiled by Thomson Reuters. The company had reported 10.5 percent fall in the adjusted revenue to $2.31 billion.
Additionally, the company has approved a 3% increase to the quarterly dividend, raising the quarterly payout to $0.67 per share. The company has also approved an increase to the share repurchase authorization of $3 billion, which brings the total amount available to $4.2 billion.
For the fourth quarter, the company expects revenue is expected to be $2.55 billion plus or minus $200 million, Non-GAAP operating margin is expected to improve sequentially and be in the lower half of the target range of 13% to 16% of revenue and non-GAAP EPS is expected to be $1.10 plus or minus $0.15.