Xyratex: Baker Street Bets Half The Fund, Imminent Catalyst For 70% Upside
Kingsley Park Capital • 37 Comments
Kingsley Park Capital • 37 Comments
Xyratex: High R&D Expense Masking True Value
Mar. 31, 2014, 4:27 PM
- Seagate's (STX) $294M purchase of hard drive equipment/storage subsystem maker Xyratex (XRTX), announced on Dec. 23, is officially on the books.
- With Xyratex's third-party hard drive equipment clients likely to start looking elsewhere, the business is expected to produce just $500M-$600M in revenue during Seagate's FY15 (ends July 3, 2015), and be neutral to EPS during the year. Xyratex had revenue of $814.3M and EPS of $0.15 during its FY13 (ended Nov. '13).
- Analysts have argued Xyratex rival Teradyne (TER) will benefit from the deal, as Western Digital/Toshiba step up their orders.
- Opinions have been mixed on whether the deal is a smart move for Seagate: Those who like it think Seagate's hard drive manufacturing ops and /R&D will benefit from further vertical integration, and see a major opportunity to sell Xyratex's ClusterStor systems to Web/cloud providers. Those who don't are worried about channel conflict with both hard drive equipment buyers and Seagate's storage OEM clients.
Jan. 13, 2014, 8:09 AM
- Xyratex (XRTX): FQ4 EPS of -$0.03 misses by $0.15.
- Revenue of $185.25M (-30.2% Y/Y) misses by $23.48M. (PR)
Jan. 13, 2014, 12:05 AM| Jan. 13, 2014, 12:05 AM
Jan. 12, 2014, 5:30 PM| Jan. 12, 2014, 5:30 PM | 1 Comment
Dec. 23, 2013, 12:46 PM
Dec. 23, 2013, 9:25 AM
- Seagate (STX) is acquiring hard drive equipment/storage subsystem maker Xyratex (XRTX) for $13.25/share, or $294M if excluding $80M in cash on hand. The price represents a 27% premium to Xyratex's Friday close. (PR)
- By acquiring Xyratex, which has counted Seagate, Western Digital (WDC), and Toshiba among its clients (the latter two might now now turn to other suppliers), Seagate is vertically integrating in an effort to gain a manufacturing edge. The purchase comes shortly after Western beat Seagate to the punch in shipping helium drives (they're lighter, denser, and more power-efficient than conventional drives), a technology long promoted by Xyratex.
- The deal also increases Seagate's enterprise storage exposure. As SA Pro contributor Kingsley Park Capital has noted, Xyratex, historically focused on relatively low-end solutions, recently launched ClusterStor, a solution aimed at the growing, higher-margin HPC storage market.
- Seagate expects the purchase to contribute $500M-$600M to FY15 (ends June '15) revenue, and to be neutral to FY15 EPS. The deal is expected to close by mid-2014. Activist investor Baker Street Capital, which has a large stake in Xyratex, backs the deal.
Dec. 23, 2013, 9:10 AM
Oct. 4, 2013, 9:30 AM
- Shares of Xyratex (XRTX) fell 6.8% in AH trading following the company's FQ3 beat on the back of weaker-than-expected FQ4 guidance.
- FQ3 results were improved by a $0.06 effect to EPS due to a pull-forward of Capital Equipment revenue than was anticipated in FQ4.
- Management guides for FQ4 revenue of $190M-$220M (-28% to -17% from FQ4 last year and -12% to 1% from FQ3) vs consensus of $218.4M. Gross margin is expected to be 21%-22%, with EPS of -$0.04 to $0.20 vs. consensus of $0.16
- XRTX had run up 14.5% since mid-Sept., when speculation surfaced that the company's ClusterStor product would drive results higher than analyst expectations.
- conference call, PR
Oct. 4, 2013, 12:05 AM
- Xyratex (XRTX): FQ3 EPS of $0.21 beats by $0.13.
- Revenue of $217.3M (-21% Y/Y) beats by $7.99M. Shares -7.8% AH. (PR)
Oct. 3, 2013, 12:10 AM| Oct. 3, 2013, 12:10 AM
Oct. 2, 2013, 5:35 PM| Oct. 2, 2013, 5:35 PM
Sep. 19, 2013, 11:23 AM| Sep. 19, 2013, 11:23 AM
Jul. 1, 2013, 5:30 PM
Jul. 1, 2013, 4:13 PMXyratex (XRTX): FQ2 EPS of $0.10 beats by $0.15. Revenue of $216.2M beats by $13.04M. Shares +1.23% AH. (PR) | Jul. 1, 2013, 4:13 PM
Jul. 1, 2013, 12:10 AM
Jun. 30, 2013, 5:35 PM
Xyratex, Ltd. is a provider of modular enterprise-class data storage solutions and storage process technology.
Industry: Data Storage Devices
Country: United States
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