10-QPeriod: Q2 FY2013

Seagate Technology Holdings plc Quarterly Report for Q2 Ended Dec 28, 2012

Filed January 29, 2013For Securities:STX

Summary

Seagate Technology plc's (STX) 10-Q filing for the period ending December 28, 2012, reveals a solid financial performance characterized by robust revenue and profitability. The company demonstrated strong operational cash flow generation, which supported significant share repurchases and dividend payments. Strategic acquisitions, particularly the LaCie S.A. acquisition, are being integrated to expand market reach, especially in consumer storage. The company also benefited from the full inclusion of the Samsung HDD business in its results. While the company reported a slight sequential decrease in revenue due to price erosion, year-over-year revenue growth was driven by increased volumes, including contributions from the Samsung acquisition. Gross margins saw a decrease compared to the prior year's quarter, largely attributed to higher ASPs in the prior year following the Thailand flooding impact on industry supply. Despite these pressures, Seagate's financial position remains strong, supported by substantial cash reserves and an undrawn revolving credit facility.

Financial Highlights

56 data points
Beta

Revenue

$3.67B

27.0% Gross Margin

Net Income

$492.00M

13.4% Net Margin

EPS (Diluted)

$1.30

Total Assets

$8.74B

Cash & Equivalents

$1.38B

Free Cash Flow

$680.00M

Financial Statements
Beta
Revenue$3.67B
Cost of Revenue$2.68B
Gross Profit$992.00M
R&D Expenses$277.00M
SG&A Expenses$139.00M
Operating Expenses$3.11B
Operating Income$555.00M
Interest Expense$55.00M
Net Income$492.00M
EPS (Basic)$1.33
EPS (Diluted)$1.30
Shares Outstanding (Basic)369.00M
Shares Outstanding (Diluted)379.00M

Key Highlights

  • 1Revenue for the quarter was $3.668 billion, with 58 million units shipped at an Average Selling Price (ASP) of $62.
  • 2Net income attributable to Seagate Technology plc was $492 million for the quarter.
  • 3The company generated $844 million in operating cash flow during the December 2012 quarter.
  • 4Seagate repurchased 30 million ordinary shares for approximately $841 million during the quarter.
  • 5Dividends paid to shareholders totaled $254 million, including a one-time acceleration of $136 million.
  • 6The acquisition of LaCie S.A. is progressing, with Seagate owning approximately 93.5% of the outstanding shares by the end of the quarter.
  • 7Product development expenses increased due to investments in storage technologies and headcount, as well as the inclusion of the acquired Samsung HDD business.

Frequently Asked Questions

Seagate reported revenue of $3.668 billion for the quarter ended December 28, 2012. This represents a slight decrease from the previous quarter ($3.732 billion) due to price erosion but a significant increase compared to the same quarter last year ($3.195 billion) driven by higher volumes, including the full inclusion of the Samsung HDD business.

Seagate generated strong operating cash flow of $844 million in the quarter. This cash flow supported substantial capital allocation activities, including $841 million used for share repurchases (30 million shares) and $254 million in dividends paid to shareholders. The company also has a significant amount of cash and short-term investments ($1.97 billion) and an undrawn $350 million revolving credit facility, indicating a strong liquidity position.

The acquisition of LaCie S.A. is ongoing, with Seagate owning approximately 93.5% of the shares by the end of the quarter. The company incurred $36 million in cash for the acquisition and $1 million in related expenses. This acquisition is expected to accelerate Seagate's growth strategy in the consumer storage market.

Seagate is involved in several legal proceedings, including intellectual property litigation and employment-related claims. While the company believes most claims are without merit and intends to defend them vigorously, the outcomes are uncertain. The Convolve, Inc. patent case and the Alexander Shukh employment case are noted as having an uncertain range of potential losses that cannot be reasonably estimated at this time. However, recent positive rulings in the Rembrandt Data Storage and Rambus Inc. ITC investigations are favorable.