Jul. 9, 2014, 5:29 PM
- Global PC shipments fell only 1.7% Y/Y in Q2 to 74.4M, says IDC. That's much better than the firm's forecast for a 7.1% drop, and smaller than the 4.4% and 5.6% declines respectively seen in Q1 and Q4. Gartner is even more positive, estimating shipments rose 0.1%, thus ending a long string of declines.
- Unsurprisingly (especially given INTC's Q2 guidance hike), IDC thinks business PC upgrades stemming from Microsoft's (MSFT) ending of Win. XP support helped out. But it also says consumer demand was better than expected, with sales of low-end PCs (inc. Chromebooks) improving amid slowing tablet growth.
- Sales in the U.S. and EMEA (two high-ASP regions) rose, while Asia-Pac (exc. Japan) still fell by nearly double digits. IDC now thinks full-year industry growth "could get closer to flat, rather than the May projection of -6%."
- IDC's Q1 share data points to industry leaders gaining at the expense of smaller players: Lenovo (LNVGY) 19.6% share, +270 bps Y/Y. H-P (HPQ) 18.3%, +190 bps. Dell 14%, +180 bps. Acer (ACEIY) 8.2%, -10 bps. Asus (ASUTY) 6.2%, +30 bps. Everyone else 33.6%, -690 bps.
- HPQ +0.6% AH. Other names with strong PC exposure: AMD, NVDA, MU, STX, WDC, HTCH.
Jul. 8, 2014, 11:28 AM
- Following checks with Japanese hard drive component suppliers Nidec and TDK, and research firm TSR, CLSA reports Seagate (STX -0.9%) is cutting its Sep. quarter forecast for industry hard drive shipments to ~133M from a prior 140M-145M.
- In April, Seagate guided for June quarter industry shipments to be "down a few points" from a March quarter level of 138M, but to also reach 140M-145M in each of the next 2 quarters. The market has been pressured by SSD cannibalization and weak enterprise storage sales, but has also benefited from stabilizing PC sales and healthy demand from Internet giants.
- Seagate and Western Digital (WDC -1.5%) are only down moderately on a rough day for tech. Seagate reports on July 17, and Western on July 30.
- Other names with strong industry exposure: MRVL, HTCH
Jun. 12, 2014, 6:13 PM
- Seagate (STX) +0.8% AH and Western Digital (WDC) +0.9% after Intel hiked its Q2 and full-year guidance, while citing stronger-than-expected corporate PC demand.
- Several other names with strong PC industry exposure are also up. Seagate's PC hard drive shipments fell by 400K Y/Y in the March quarter to 36.2M. Western's shipments fell by 1.5M to 38.4M.
Jun. 6, 2014, 6:40 PM
- Thanks to a 25% drop in high-end storage spend, external disk storage and total disk storage sales respectively fell 5.2% and 6.9% Y/Y in Q1, says IDC. Those figures contrast with Q4 growth rates of 2.4% and 1.3%.
- Market leader EMC, which depends heavily on its high-end Symmetrix line, saw its external share fall 110 bps Y/Y to 29.1%, and its total share fall 50 bps to 22.4%. EMC previously reported its high-end sales fell 22% in Q1; strong flash/scale-out storage sales partly offset the drop.
- NetApp's (NTAP) low high-end exposure allowed its shares to grow 30 bps and 50 bps to 15.1% and 11.7%, in spite of a 2.8% revenue drop. H-P's (HPQ) external share rose 40 bps to 8.8% (3PAR strength), but its total share fell 20 bps to 15.1% (server weakness).
- Things still look bleak for IBM, which reported a 23% Y/Y Q1 system storage revenue drop: Its external share fell 200 bps to 8.8%, and its total share 180 bps to 10.1%.
- The total disk share of non-top-5 vendors rose 370 bps to 28.8%. Chalk that up to both surging demand for cloud storage (getting cheaper by the quarter) running on commodity hardware, and solid momentum for flash/hybrid storage upstarts such as Nimble (NMBL), Pure Storage, and Nutanix.
- Hard drive/assembly suppliers: STX, WDC, HTCH
May. 27, 2014, 2:10 PM
- A "material ramp" in high-margin enterprise drive shipments in 2H14 could provide $0.30/share in upside to Seagate (STX +2.6%) EPS estimates, writes RBC's Amit Dayanani.
- Daryanani thinks enterprise drives carry a 40%+ gross margin, well above a company-wide FQ3 GM of 28.5%. He believes Seagate can deliver $7+ in FY16 (ends June '16) EPS, aided by cost controls, buybacks, and a 30% GM.
- Seagate's enterprise drive sales rose 200K Y/Y in FQ3 to 7.7M. They've been pressured by weak enterprise server/storage demand, but have also received a lift from strong demand from Web/cloud clients. The latter customer base often prefers higher-density/lower-margin enterprise drives.
- Western Digital (WDC +2.6%) is once more heading in the same direction as Seagate, as is assembly supplier Hutchison (HTCH +2.9%).
May. 15, 2014, 9:48 AM
May. 8, 2014, 12:40 PM
- "The 3D NAND industry cycle will be longer than historical patterns and SanDisk (SNDK +3.7%) has a longer-term mix shift toward higher value enterprise SSDs and 2D NAND cost advantages," writes Raymond James while upgrading the NAND flash giant to Strong Buy.
- Nomura has upped SanDisk to Neutral and hiked its 2014/2015 estimates. The firm is still worried about the NAND pricing/margin gap that exists between SanDisk and rivals, it thinks "the risks of an earnings miss in 2H14 have declined" amid seasonal improvements and slowing industry supply growth.
- In its investor day slides (.pdf), SanDisk forecasts annual NAND flash industry bit growth will be in a modest 30%-40% range going forward. The company also noted its client SSD sales tripled in 2013 to $922M - SanDisk claims to be the market's #2 vendor. Enterprise sales almost doubled in 2013 to $267M; SanDisk is aiming for over $1B in 2016 enterprise sales.
- Of interest to Seagate (STX +1%) and Western Digital (WDC +1.7%) investors: SanDisk predicts the SSD attach rate for business notebooks will grow to 39% in 2017 from 16% in 2013, and that the rate for consumer notebooks will grow to 21% from 10%. The hard drive industry is already expected to see limited growth due to SSD pressure.
- Both SanDisk and NAND rival Micron (MU +3.3%) have made fresh 52-week highs. Micron rallied last week following a report the company is set to hike DRAM prices.
- Yesterday: SanDisk hiking dividend to $0.30/share
May. 1, 2014, 10:06 AM
- Like Seagate (STX -4%), Western Digital (WDC -6.1%) missed FQ3 revenue estimates while beating EPS forecasts. Also like Seagate, it offered light FQ4 guidance on its CC (transcript): Revenue of $3.5B-$3.6B and EPS of $1.65-$1.75 vs. a consensus of $3.72B and $1.89.
- While Seagate estimates March quarter industry hard drive shipments totaled 138M, Western pegs them at 137M. More importantly, the company expects shipments to fall to 130M in the June quarter.
- Goldman notes hyperscale data center owners (Google, Facebook, Amazon, etc.) are getting more efficient with their storage usage, and that this is affecting both Western and Seagate. Seagate is also dealing with inventory issues at enterprise storage OEMs; Western isn't reporting anything similar.
- With SSDs continuing to encroach on hard drives, Western's enterprise SSD sales grew to $134M (+46% Y/Y, still less than 4% of sales) in FQ3, and are expected to outgrow the broader market going forward. Non-PC applications made up 53% of total revenue.
- Western's ASP fell $2 Q/Q to $58 due to.a mix shift towards console hard drive sales. In spite of the ASP drop, gross margin was 30.1%, flat Q/Q and up 90 bps Y/Y, and above guidance of 29.5%. A 29.5% GM is forecast for FQ4.
- $244M was spent on buybacks, up from $150M in FQ2. Free cash flow was $536M vs. $539M a year ago.
- Hard drive controller supplier Marvell (MRVL -1%) is off moderately.
Apr. 30, 2014, 4:35 PM| Comment!
Apr. 30, 2014, 12:45 PM
- 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
Apr. 14, 2014, 1:37 PM
- Citing improving margins and a favorable hard drive supply/demand balance, Argus has upgraded Seagate (STX +3%) to Buy. Archrival Western Digital (WDC +2.2%) is also rallying.
- Seagate had a 28% GM in its December quarter (flat Q/Q and +100 bps Y/Y), and guided for margins to be roughly flat Q/Q in the March quarter. Western had a 30.1% GM (+30 bps Q/Q and +140 bps Y/Y), and guided for March quarter GM to be near the midpoint of a 27%-32% target range.
- Both companies have seen a margin boost from hard drive industry consolidation. Seagate reports on April 29, and Western on April 30.
Apr. 9, 2014, 4:52 PM
- IDC estimates global PC shipments fell 4.4% Y/Y (less than a 5.3% forecast) in Q1 to 73.4M, after having declined 5.6% in Q4 and 7.6% in Q3. Gartner thinks shipments only fell 1.7%, and totaled 76.6M.
- IDC chalks up the narrower decline to healthy commercial demand, as buyers purchased Windows 7 systems ahead of Microsoft's (MSFT) termination of Windows XP support. The firm also thinks slowing tablet growth helped out.
- IDC thinks Japanese shipments rose 7%, and U.S. shipments only fell 0.6% thanks to 3.5% desktop growth. Emerging Asia-Pac and Latin American markets, where tablet cannibalization is at an earlier stage, remained weak..
- A mix shift towards developed markets benefits both Microsoft (higher ASPs, less piracy) and Intel (INTC - higher ASPs).
- IDC estimates market leader Lenovo (LNVGY) had a 17.7% share, +220 bps Y/Y. #2 H-P's (HPQ) share rose 150 bps to 17.1%, and #3 Dell's 170 bps to 13.4%. #4 Acer's (ASIYF) share fell 130 bps to 6.8%, and #5 Asus' 20 bps to 5.9%.
- The Q1 numbers suggest IDC's prior full-year forecast for a 6% shipment drop might prove too pessimistic.
- Other companies with strong PC exposure: AMD, NVDA, MU, STX, WDC, HTCH
Apr. 1, 2014, 6:40 PM
- With demand pressured by PC weakness and SSD cannibalization, Gartner forecasts global hard drive shipments will post a 2.9% CAGR from 2013-2018, growing from 552M units to 635.1M.
- High-capacity business-critical drives, beloved by Web/cloud service providers, are expected to fuel much of the industry's growth by delivering a 25.1% CAGR. Western Digital's (NASDAQ:WDC) new Helium drives are aimed in large part at this segment.
- The market for high-margin performance-optimized drives, where Seagate (NASDAQ:STX) has a leading position, is expected to see a -4.9% CAGR. In addition, the segment's ASP is expected to fall 17.1% annually.
- PC drives are a mixed bag: Sales of 3.5" desktop drives are expected to see a -7% CAGR, but 2.5" mobile/notebook drives are seen growing at a 4.2% annual clip. CAGR forecasts for 2.5" and 3.5" consumer electronics drives are respectively at 4.4% and 2.4%.
- Though both Seagate and Western have both launched SSDs, Western has been more aggressive at increasing its flash exposure, as evidenced by the sTec, VeloBit, and Virident deals. Seagate is looking to strengthen its hard drive position through the just-closed Xyratex acquisition. Both firms are pitching 5mm-thin ultra-slim hard drives as an alternative to notebook SSDs.
- Other companies with strong industry exposure: MRVL, LSI, HTCH, OTCPK:TOSBF
Mar. 7, 2014, 5:52 PM
- After falling 3.5% Y/Y in Q3, external disk storage system sales rose 2.4% in Q4, says IDC. The growth came even though sales of the servers that interact with these systems fell an estimated 4.4%.
- Total disk storage sales, which include storage subsystems found within servers, rose 1.3% in Q4 after dropping 5.6% in Q3. IDC attributes the turnaround to "traditional year-end budget flushes, improved economic sentiment, and a strong desire to address long-standing storage infrastructure inefficiencies."
- Market leader EMC, which posted strong Q4 numbers to go with light guidance, saw its external disk share rise 220 bps Y/Y to 32.9%, and its total disk share rise 200 bps to 25.8%. The gains largely came at the expense of restructuring IBM, whose shares respectively fell 190 bps and 200 bps to 13% and 14%.
- H-P's (HPQ) external disk share rose 30 bps to 9.6%, and its total disk share 40 bps to 16.3%. NetApp (NTAP), which delivered nearly in-line revenue and soft guidance last month, saw its external share fall 10 bps to 11.5%, and its total share stay flat at 9%. Private Dell's total share fell 140 bps to 9.9%.
- Hard drive/assembly suppliers: STX, WDC, HTCH
Feb. 7, 2014, 5:50 AM
Jan. 27, 2014, 6:07 PM
- In addition to missing FQ2 estimates, Seagate (STX) has guided on its CC for FQ3 revenue of "at least" $3.4B; that compares unfavorably with a consensus of $3.46B.
- Seagate estimates the total addressable market (TAM) for hard drives stood at 142M (same as Western Digital) in the December quarter, up by 2M Q/Q and 6M Y/Y. The company estimates its share was 40%, flat Q/Q but down from 43% a year ago.
- FQ2 gross margin was 28%, flat Q/Q and up 100 bps Y/Y. $1.5B was spent on buybacks, thanks to the Samsung deal.
- Enterprise shipments (higher-margin) +7% to 7.8M, desktops -12% to 19.2M, notebooks -2% to 16.9M, consumer electronics +20% to 6.7M, branded drives (also higher-margin) +3% to 6.2M.
- Western Digital (WDC) is ticking lower in sympathy with Seagate. The shoe was on the other foot last week.
- Seagate's earnings slides
WDC vs. ETF Alternatives
Western Digital Corp is a developer, manufacturer & provider of data storage solutions that enable consumers, businesses, governments & other organizations to create, manage, experience & preserve digital content. Its product include; HDDs and SSDs.
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