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Tuesday, April 15, 2008

Seagate (STX) 3Q:2008 Results

Comes in below the revenue guidance of 3.2 - 3.3 bil they had out there for the quarter at 3.1 bil. Non-GAAP operating income looks right on the button and gross margins are slightly over 26%, which is a positive surprise. They guide next quarter to 2.85 - 3.00 bil, which is below consensus of 3.1 bil. EPS the big miss with guidance of ~45 cents below the 58 cents the street has in print.

I think this is in line with recently lowered expectations of a miss due to weakness at the end of the quarter (thats why they missed guidance -- it was all back-end loaded miss). Inventories in the channel are running higher than the range they'd like. I think a lot of this is baked in with the stock at $20 and I'm a buyer on weakness. I bought a little Western Digital at $26.4 already.

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