STX guides above Street for 2010 with $2.20 eps vs. $1.90 consensus (STX down pre-market to $15.15)
Seagate Sees FY 2010 EPS Above Street; Begins Shipping First SSD ProductOctober 20, 2009, 7:27 PM ET
By Eric Savitz at Barrons Online
Seagate (STX) expects revenue for the June 2010 fiscal year of $10.5 billion, with non-GAAP EPS of $2.20; the Street has been expecting $10.5 billion and $1.90. In an interview with Tech Trader Daily this afternoon, CEO Steve Luczo said that the forecast does not assume a significant recovery in enterprise spending, and does not anticipate a major PC refresh cycle.
Luczo says that Seagate, which today reported better-than-expected results for the September quarter and provided December quarter guidance that exceeded Street expectations, said that “every week in the quarter was strong,” with much more linear results than has historically been the case for Seagate. “We weren’t so back-end loaded,” he says. “We had better visibility earlier, which allows out factories to be more efficient.” He says the good has been seeing “really good traction” with customers for many of its newer products.
As for the PC market, he does say that he is “more bullish on the PC outlook than some of the perceptions out there.” He says that, contrary to recent comments from Advanced Micro Devices (AMD), there has not been a lot of pre-build PC inventory build ahead of the arrival this week of Microsoft (MSFT) Windows 7.
Luczo notes that the company still sees a huge opportunity in the external back-up storage market, noting that the penetration rate for external drives in the U.S. is only 15%-17% of all PCs, which he notes is higher than the 10%-12% rate in Europe and under 5% in China. In short, he thinks the tremendous amount of personal data consumers are generating will drive increasing need for storage - and he thinks it will be years before most of that moves to the cloud.
Meanwhile, Luczo noted that he disclosed on the company’s September quarter earnings conference call today that Seagate has begun shipping its first SSD products for the enterprise market, ahead of expectations. He says the solid-state drives are targeted at enterprise system providers like EMC, IBM, Dell, Cisco and Hewlett-Packard; they are already shipping to customers. Luczo says SSDs should be material to the company’s financials somewhere in the 2011-2013 period, but he also says that the ability to offer them along with hard drives to storage systems providers could result in additional business in the HDD market.
STX in late trading is actually down 40 cents, or 2.6%, to $15.15.