Seagate Technology plc (NASDAQ:STX), a world leader in storage
solutions, today announced selected preliminary financial information
for its fiscal first quarter of 2016, which ended on October 2, 2015.
Seagate expects to report revenue of approximately $2.9 billion and
non-GAAP gross margin of approximately 24% for the fiscal first quarter
2016. The Company expects to report unit shipments for the fiscal first
quarter of approximately 47 million and maintaining approximately 40%
market share.
These preliminary results compare to the Company’s previously forecasted
range for fiscal first quarter of revenue of $2.9 to $3.1 billion and
non-GAAP gross margin of approximately 27%. The difference in the
Company’s non-GAAP gross margin from its forecast was driven primarily
by lower than expected intra-quarter demand for the Company’s 4TB and
6TB nearline HDD products. Seagate announced its 8TB nearline HDD
products in September and expects to increase its market participation
in this growth segment over the next several quarters.
“While Seagate had strong operating cash flows and made significant
progress in cost containment in the September quarter, we are
disappointed we did not execute a product portfolio that fully addressed
the demand in the nearline market,” said Steve Luczo, Seagate’s Chairman
and CEO. “Looking ahead, we are confident that our nearline product
portfolio will be fully competitive by our fiscal third quarter.”
Non-GAAP operating expenses for the fiscal first quarter are expected to
be approximately $500 million, below previously forecasted non-GAAP
operating expenses of approximately $515 million due to better cost
containment.
First fiscal quarter cash flow from operations is expected to be
approximately $800 million. During the quarter, the Company redeemed
approximately 20 million shares and cash, cash equivalents, restricted
cash and short term investments totaled approximately $1.9 billion at
the end of the quarter.
Conference Call Details for Fiscal First Quarter 2016 Financial
Results
Seagate will report its fiscal first quarter 2016 financial results
before the market opens on Friday, October 30, 2015. The investment
community conference call to discuss these results will take place that
day at 6:00 a.m. Pacific/9:00 a.m. Eastern Time. The live event can be
accessed online at Seagate’s Investor Relations website at www.seagate.com/investors.
An archived audio webcast of this event will be available shortly
following the event conclusion.
About Seagate
Seagate creates space for the human experience by innovating how data is
stored, shared and used. Learn more at www.seagate.com.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, each as amended, including, in
particular, statements about our plans, strategies and prospects and
estimates of industry growth for the fiscal quarter January 1, 2016 and
beyond as well as our plans with respect to future dividend payments.
These statements identify prospective information and may include words
such as “expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “projects” and similar expressions. These
forward-looking statements are based on information available to the
Company as of the date of this press release and are based on
management’s current views and assumptions. These forward-looking
statements are conditioned upon and also involve a number of known and
unknown risks, uncertainties, and other factors that could cause actual
results, performance or events to differ materially from those
anticipated by these forward-looking statements. Such risks,
uncertainties, and other factors may be beyond the Company’s control and
may pose a risk to the Company’s operating and financial condition. Such
risks and uncertainties include, but are not limited to: the uncertainty
in global economic conditions; the impact of the variable demand and
adverse pricing environment for disk drives, particularly in view of
current business and economic conditions; the Company’s ability to
successfully qualify, manufacture and sell its disk drive products in
increasing volumes on a cost-effective basis and with acceptable
quality, particularly the new disk drive products with lower cost
structures; the impact of competitive product announcements; currency
fluctuations that may impact the Company’s margins and international
sales; possible excess industry supply with respect to particular disk
drive products; disruptions to our supply chain or production
capabilities; unexpected advances in competing technologies; the
development and introduction of products based on new technologies and
expansion into new data storage markets; and the Company’s ability to
achieve projected cost savings in connection with restructuring plans
and fluctuations in interest rates. Information concerning risks,
uncertainties and other factors that could cause results to differ
materially from the expectations described in this press release is
contained in the Company’s Annual Report on Form 10-K filed with the
U.S. Securities and Exchange Commission on August 11, 2015, the “Risk
Factors” section of which is incorporated into this press release by
reference, and other documents filed with or furnished to the Securities
and Exchange Commission. These forward-looking statements should not be
relied upon as representing the Company’s views as of any subsequent
date and the Company undertakes no obligation to update forward-looking
statements to reflect events or circumstances after the date they were
made.
The inclusion of Seagate’s website address in this press release is
intended to be an inactive textual reference only and not an active
hyperlink. The information contained in, or that can be accessed
through, Seagate’s website is not part of this press release.
Use of non-GAAP financial information
To supplement the condensed consolidated financial statements presented
in accordance with generally accepted accounting principles (GAAP), the
Company provides non-GAAP measures of net income, diluted net income per
share, gross margin, gross margin as a percentage of revenue, operating
margin, operating expenses, and operating income which are adjusted from
results based on GAAP to exclude certain expenses, gains and losses.
These non-GAAP financial measures are provided to enhance the user's
overall understanding of the Company’s current financial performance and
our prospects for the future. Specifically, the Company believes
non-GAAP results provide useful information to both management and
investors as these non-GAAP results exclude certain expenses, gains and
losses that we believe are not indicative of our core operating results
and because it is consistent with the financial models and estimates
published by financial analysts who follow the Company. The Company also
presents free cash flow, which is a non-GAAP measure calculated as the
sum of net cash provided by operating activities, less acquisition of
property, equipment and leasehold improvements. Free cash flow does not
reflect all of the Company's expenses and non-cash items and does not
reflect the Company's uses of cash in financing and investment
activities.
These non-GAAP results are some of the primary measurements management
uses to assess the Company’s performance, allocate resources and plan
for future periods. Reported non-GAAP results should only be considered
as supplemental to results prepared in accordance with GAAP, and not
considered as a substitute for, or superior to, GAAP results. These
non-GAAP measures may differ from the non-GAAP measures reported by
other companies in our industry.
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For the Three
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Months Ended
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October 2, 2015
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Reconciliation of Preliminary GAAP Gross Margin:
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Preliminary GAAP Gross Margin
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24
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%
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Non-GAAP adjustments:
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─
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%
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Preliminary non-GAAP Gross Margin
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24
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%
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|
|
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For the Three
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|
|
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Months Ended
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October 2, 2015
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Reconciliation of Preliminary Operating Expense:
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Preliminary GAAP Operating Expense
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$
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603
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Non-GAAP adjustments
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(A)
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(101
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)
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Preliminary non-GAAP Operating Expense
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$
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502
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(A)
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Preliminary operating expense has been adjusted on a non-GAAP
basis to exclude the impact of integration costs associated with
acquisitions, the write off of certain fixed assets, amortization
of intangibles primarily related to our acquisitions, and
restructuring and other expenses related to a reduction in our
work force as a result of our ongoing focus on cost efficiencies
in all areas of our business.
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