Summary
Seagate Technology Holdings plc (STX) reported its fiscal second quarter 2016 results for the period ending January 1, 2016. Revenue for the quarter was $2.99 billion, a decrease from $3.70 billion in the same period last year, reflecting lower unit shipments and price erosion, primarily due to decreased demand in personal computing devices. Net income also saw a significant decline, falling to $165 million ($0.55 per diluted share) from $933 million ($2.78 per diluted share) year-over-year. Despite the revenue and profit decline, the company completed the acquisition of Dot Hill Systems Corp. for $674 million, which is expected to expand its cloud storage systems business. Operationally, the company experienced a decrease in gross margin percentage due to price erosion, although product mix improvements partially offset this. Operating expenses were reduced year-over-year, driven by workforce restructuring and increased operational efficiencies. Seagate also continued its capital return program, repurchasing $1.06 billion in ordinary shares and paying $351 million in dividends during the six-month period. The company maintains a strong liquidity position with approximately $1.3 billion in cash, cash equivalents, and short-term investments, along with a $700 million revolving credit facility.
Financial Highlights
55 data points| Revenue | $2.99B |
| Cost of Revenue | $2.25B |
| Gross Profit | $741.00M |
| R&D Expenses | $304.00M |
| SG&A Expenses | $160.00M |
| Operating Expenses | $2.76B |
| Operating Income | $229.00M |
| Interest Expense | $48.00M |
| Net Income | $165.00M |
| EPS (Basic) | $0.55 |
| EPS (Diluted) | $0.55 |
| Shares Outstanding (Basic) | 299.00M |
| Shares Outstanding (Diluted) | 301.00M |
Key Highlights
- 1Revenue for the quarter ended January 1, 2016, was $2.99 billion, down from $3.70 billion in the prior year's comparable quarter.
- 2Net income for the quarter was $165 million, a substantial decrease from $933 million in the same period last year.
- 3Diluted earnings per share were $0.55, down from $2.78 year-over-year.
- 4The company acquired Dot Hill Systems Corp. for $674 million, aiming to enhance its cloud storage solutions.
- 5Gross margin percentage decreased to 25% from 28% year-over-year, impacted by price erosion.
- 6Operating expenses were reduced, particularly in product development and marketing/administrative areas, due to workforce restructuring and efficiency initiatives.
- 7Seagate returned significant capital to shareholders through $1.06 billion in share repurchases and $351 million in dividends during the six months ended January 1, 2016.