Home > Computer, Technology > Seagate shares tumble after 2Q profit falls

Seagate shares tumble after 2Q profit falls

NEW YORK (AP) — Shares of Seagate Technology PLC took a hit Thursday
after the hard disk drive maker posted lower earnings and revenue for
its fiscal second quarter citing weak consumer spending.
SPARK: Seagate said its net income fell to $150 million, or 31 cents
per share, in the last three months of 2010, down sharply from $533
million, or $1.03 per share, in the same period a year earlier.
Adjusted earnings were 33 cents per share.
Revenue fell 10 percent to $2.72 billion from $3.03 billion.
ANALYSIS: Standard & Poor’s Equity analyst Jim Yin, who rates
Seagate “Sell,” expects demand for Seagate’s products to be hurt as
more people use flash memory products and solid-state drives to store
their data rather than traditional hard drives. Yin added that industry
production capacity currently exceeds demand, and he expects holdover
inventory to pressure prices.
Wedbush Morgan
analyst Kaushik Roy said Seagate’s results, which were roughly in line
with expectations, were disappointing because rival Western Digital
Corp. recently reported better-than-expected quarterly results. He
added that while the pricing environment was “not too aggressive,” the
gross profit margins of the hard disk drive industry continue to be
“depressed” due to the effects of last summer’s price erosion. He rates
Seagate “Neutral” with a target price of $17.
ACTION: Shares of Seagate Technology, which is based in Dublin but
operates out of Scotts Valley, Calif., fell $1.11, or 7.8 percent, to
$13.02 in afternoon trading. In the past 52 weeks, the stock has traded
between $9.84 and $21.58.
Shares of Western Digital fell $1.42, or 4.3 percent, to $31.55. The stock has traded in the 52-week range of $23.06 and $47.
Categories: Computer, Technology
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