Summary
Seagate Technology plc (STX) reported a net loss of $21 million, or $(0.07) per diluted share, for the quarter ended April 1, 2016. This represents a significant decline from the same quarter last year, when the company posted a net income of $291 million. Revenue also saw a substantial decrease, falling to $2.6 billion from $3.3 billion year-over-year, primarily driven by lower demand for client compute and enterprise hard drives and price erosion. The company's financial performance was impacted by a challenging market environment characterized by accelerated declines in drive unit shipments. Despite the revenue and profitability decline, Seagate continued to return capital to shareholders through dividends and share repurchases. The company also completed the acquisition of Dot Hill Systems Corp. during the nine-month period, aiming to strengthen its cloud storage systems business.
Key Highlights
- 1Revenue for the quarter decreased by 22.1% to $2.6 billion compared to the prior year's $3.3 billion.
- 2The company reported a net loss of $21 million, a significant turnaround from a net income of $291 million in the same period last year.
- 3Diluted EPS was $(0.07), compared to $0.88 in the prior year's quarter.
- 4Total operating expenses decreased year-over-year from $2.99 billion to $2.57 billion, largely due to lower cost of revenue, product development, and marketing/administrative expenses.
- 5Seagate completed the acquisition of Dot Hill Systems Corp. for $674 million in cash, which is expected to expand its cloud storage systems business.
- 6The company maintained its dividend payment, declaring $0.63 per share, and continued its share repurchase program, with $1.8 billion remaining under authorization.
- 7Operating cash flow for the nine months ended April 1, 2016, was $1.41 billion, indicating continued generation of cash from operations despite the quarterly loss.