Seagate Game Drive for Xbox SSD.
Courtesy of Seagate
Seagate shares are trading sharply higher Friday after the disk-drive maker posted better-than-expected profits for its fiscal first quarter ended Oct. 1.
Seagate shares (ticker: STX) have rallied 6.2%, to $87.33, in recent trading, while investors have bid up shares of rival Western Digital (WDC) by 1.4%, to $57.60. The S&P 500 is up 0.1%.
For the quarter, Seagate reported revenue of $3.12 billion, up 34.6% from a year earlier and roughly in line with the company’s target of $3.1 billion. Non-GAAP profits were $2.35 a share, 15 cents above its forecast of $2.20 a share. Under generally accepted accounting principles, the company earned $2.28 a share.
Non-GAAP gross margin in the quarter improved to 31%, from 29.6% in the fiscal fourth quarter and 26.5% a year ago, while non-GAAP operating margin jumped to 20.1%, versus 15.4% one quarter earlier and 12.7% a year ago, and the highest level in nearly a decade.
Seagate CEO Dave Mosley said in a statement that the company had “an exceptional start to the fiscal year, with solid revenue growth, significant profit expansion and higher free cash generation” in the quarter. He notes that the company topped $2 billion in revenue for mass capacity drives, driven by demand from cloud data center, video, and image applications.
The company also boosted its quarterly dividend rate to 70 cents a share, from 67 cents. The stock has a yield of about 3.2%. Seagate bought back $425 million of its common stock in the quarter.
For the December quarter, Seagate is projecting revenue of $3.1 billion, give or take $150 million, with non-GAAP profits of $2.35 a share, give or take 15 cents. The company said the non-GAAP forecast excludes two cents a share in charges related to amortization of acquired intangible assets and 17 cents a share from stock-based compensation expense. Street consensus previously had called for $3 billion in revenue and $2.12 in EPS.
Write to Eric J. Savitz at [email protected]
