Seagate's stock price dropped 8% today after the company announced it expects weak first-quarter performance based on slowing PC sales. The news followed a lack-luster quarter, which Seagate reported yesterday.
Seagate reported financial results for its fourth quarter and for the fiscal year 2012, which ended June 29. The quarter was down compared to the previous quarter, but the company for the full year saw revenues up 36%.
Seagate lost its disk drive market share lead to Western Digital (WD) last quarter. WD reported record earnings last week, bouncing back from significant damage from flooding last year at its Thailand-based drive factories.
During the fourth quarter, Seagate reported revenue of approximately $4.5 billion, with a gross margin of 33.1% -- up just 1.9% over the previous quarter. The company had originally expected $5 billion in revenue for the quarter. Net income for the quarter was $1 billion, with a diluted earnings per share of $2.37.
For the entire fiscal year of 2012, Seagate reported revenue of $14.9 billion, 36% over the prior fiscal year. Much of that increase was attributed to WD's flooding problems. Seagate's diluted earnings per share for the year were $6.75, also a significant increase in profitability over the prior year, the company said.
During its fourth quarter, Seagate announced an agreement to acquire consumer external drive company LaCie. Seagate said the purchase will give it increased access to "premium retail channels." Seagate also announced the acquisition of Samsung's drive business and a joint development agreement with Densbits to make new consumer and enterprise-class solid-state drives (SSDs). The company also became the first drive maker to demo SSDs with the new 12Gbps SAS standard.
In a supplemental commentary on its year-end earnings, Seagate stated that its business was impacted by an isolated supplier quality issue that affected one high-demand, high-margin mission critical enterprise hard drive product.
"This one-time issue decreased enterprise sales by approximately 1.5 million hard drives in the June quarter, impacting revenue and profitability," Seagate stated. "The company believes it has fully resolved the issue and has resumed shipments of the product."
"As we announced previously, we were disappointed not to meet our revenue and margin plan for the fourth quarter as a result of the industry's faster recovery from the supply chain disruption and an isolated supplier issue that we experienced," Seagate CEO Steve Luczo said in a statement. "Nevertheless, we are pleased to have achieved record revenue and unit shipments for the June quarter...."
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