Seagate expects financial turmoil
A financial storm raging in the storage sector continues, and Seagate Technology is the latest casualty to be hit with a bolt of dour news.
Seagate said continued weakness in demand for its high-performance products, combined with greater-than-anticipated pricing pressure, will push the company's second-quarter earnings downward, causing it to miss Wall Street expectations for the earnings period ending January 2.
Storage makers are feeling the pressure from new players entering the field, such as Fujitsu and IBM (IBM), analysts said.
Seagate announced in October that it is reviewing its worldwide operations, considering a significant restructuring and the possibility of taking one-time charges. These charges are likely to exceed the high end of the company's previously estimated range of $50 million to $100 million.
The company said it believes it will miss its profitability mark for the upcoming quarter, even excluding those charges.
Wall Street analysts were expecting profits of 24 cents a share, according to First Call.
Seagate, a manufacturer of both storage and network-management software, reported profits of $212.6 million, or 91 cents a share, for its fiscal second quarter last year. The company's revenues, meanwhile, reached a record $2.4 billion for the quarter.
Seagate stock is trading down near its 52-week low. It ended the day at 24-5/16, off 4 percent from yesterday's close of 25-3/8.
Earlier this month, Western Digital (WDC) said its December-quarter results would be negatively impacted by competitive pricing pressures in the desktop hard-drive business, as well as by product-mix and cost issues associated with the company's last rollout of desktop drives.