For its third quarter the Scotts Valley, California-based company posted a 44% increase in net income to $229m, or $0.45 a share, up from $159m, or $0.32 a share a year earlier. Sales rose 42% to $1.97bn, up from $1.38bn. Analysts polled by Thomson First Call were expecting a profit of $0.37 a share on sales of $1.85bn. Results for this quarter are also expected to exceed analysts’ estimates.
The world’s largest maker of computer disk drives compounded the good news after CEO Bill Watkins said that the company anticipates a strong financial performance throughout the calendar year, which is especially good news as June’s quarter (the company’s fourth and last fiscal quarter) is typically its slowest of the year.
After a number of gloomy predictions from some big name IT outfits over the past week, the announcement helped eases fears that IT spending is slowing. The market reward the company with a 3.5% rise in its shares to $17.95 on the New York Stock Exchange, as of 4pm BST on Wednesday.
Seagate continued to grow sales in the increasingly important market for consumer electronics, shipping 4.2 million drives for handheld, gaming and digital video recorder products, up nearly 300 percent from the year-ago quarter and up 24 percent from the prior period. Indeed, sales for use in products such as Apple’s iPod, digital video recorders and game machines now account for 13% of the company’s revenue.
Seagate is also benefiting from the broad introduction by cable television operators the US of set-top boxes with recording capabilities, and from companies expanding their networks’ storage capacity in light of new regulatory requirements, Seagate executives said on a conference call.
The company’s average selling price for its hard disk drives in the quarter was $79, up by $2 from the year-ago period. In the quarter, Seagate shipped 25 million drives, up from 18 million a year ago.
In the enterprise market, where Seagate’s drives are used in large disk arrays, storage area networks, and other storage networks, Seagate shipped a record 3.4 million hard disk drives, an increase of 38% from a year ago.
In mobile computing products like laptops PCs, Seagate said it had its third consecutive quarter of share growth as unit shipments climbed to 1.8 million units, up 85% from the year-earlier period.
The one cloud on the horizon came after the head of global sales and marketing, Brian Dexheimer, doused expectations of an exploding new market with hard disks being installed in top of the range mobile phones, which would be a potentially huge market.
During a conference call with analysts, Dexheimer revealed these products aren’t likely to ship until 2007. He highlighted the difficulties associated with marrying the applications to the hardware, and pointed out that Samsung Electronics had only produced a few hundred handsets with hard drives, mainly for demonstration purposes.
