In addition to missing FQ3 revenue estimates (while beating on EPS), Seagate (STX -1.3%) guided on its CC (transcript) for FQ4 revenue of "at least" $3.3B, unfavorable to a $3.4B consensus. Gross margin is expected to slip to 28% from an FQ3 level of 28.5% due to seasonality.
In its earnings slides (.pdf), Seagate estimates industry hard drive shipments totaled 138M in FQ3, down 4M Q/Q but up 2M Y/Y. The company expects unit demand to be "down a few points" in FQ4, but also forecasts 140M-145M shipments for the following two quarters.
With the industry having consolidated around Seagate, Western Digital (WDC +0.8%), and Toshiba, pricing is expected to be "relatively stable" in FQ4, and price pressure "benign" in 2H14.
High-margin enterprise drive shipments rose by 200K Y/Y to 7.7M. Desktop shipments managed to grow by 200K to 19.8M after many quarters of declines, but notebook shipments fell another 600K to 16.4M. Consumer electronics shipments fell 400K to 5.4M, and high-margin branded drive shipments rose 200K to 5.9M.
$184M was spent on buybacks in FQ3. Free cash flow fell to $319M from $713M in FQ2 and $452M a year ago.
For once, Western isn't following Seagate lower; the company reports after the close. Assembly supplier Hutchison (HTCH -1.4%) is down slightly.
FQ3 results, PR