Declining demand forced Seagate to reduce hard drive production, stock fell by 11%

Declining demand forced Seagate to reduce hard drive production, stock fell by 11%

The correct sign of a demand that is not very favourable to the producer is the refusal to publish data on the quantity of goods shipped. The hard drive suppliers, like Apple, have long hidden the obvious value of this indicator in their quarterly reports, and Seageate has exacerbated the situation with a less optimistic estimate of revenues for the current quarter. Companies will have to limit the volume of output to match demand.

On July 1, the Seagate Technology calendar completed its fourth quarter of the 2022 fiscal year, so this week it recorded not only a quarter but also a total of 12 months. The quarterly revenue of $2.63 billion was 6% lower than in the previous quarter; the annual decline was 13%. Operating expenditure reached $399 million, increasing by 6%, both consecutively and year by year. The operating rate fell from 15.3 to 13.7% consecutively and from 16.8% annually. Net profits fell by 43% to $276 million compared with the same period the previous year. In fact, negative developments in the last fiscal quarter did not prevent Seagate from increasing revenue by 9% over the year to $11.7 billion, including 24% in the large-capacitors segment.

Direct deliveries of hard disks brought Seagate $2.41 billion in the last quarter. The remaining $218 million was generated by solid storage and various data storage systems. In the first direction, revenue declined by 6 per cent consecutively and by 12 per cent in the annual comparison. The concentration of supplies in the OEM segment reached 81 per cent, which was markedly higher than 70 per cent a year ago. Distributors received no more than 10 per cent of Seage output in monetary terms, and the gap was limited to 9 per cent, compared to 12 per cent a year earlier.

In the consumer segment, the company ' s products are now barely represented, as pointed out by Director General Dave Mosley at a quarterly event. The share of customers ' earnings by the end of the quarter was limited to 5.6%. This is also evident in the increase in the average capacity of the savings delivered, which reached 7.8 terabytes by the previous quarter, an increase of 43% over the year, while the total capacity of the storage tanks increased by only 1% to 154.6 exabytes, which makes it possible to determine the number of storages shipped, which did not exceed 19.8 million in the last quarter. In comparison, the previous year Seagate put 28.2 million on the market, which shows a 30% reduction in the volume of supplies.

By the way, in the current quarter of Seagate will be forced to reduce the volume of storage, as demand in the consumer segment has declined as a result of macroeconomic factors. " The head of the company explained that he is convinced that the owners of data processing centres will continue to purchase hard disks of large storage capacity in decent quantities, and market demand is generally normalizing in a couple of blocks. Meanwhile, the company is projecting a decline in revenues in the current quarter to $2.35 billion in the worst case, although it is possible that the scenario remains at the current level. The publication of quarterly accounts has led to a decline in the share rate of Segat Technology by almost 11%.

Last quarter, over 20 TB reservoirs were in high demand among cloud-services players in the United States, and in the current quarter they will dominate the supply structure by replacing 18 TB storage units. In the next 12 months, Seagate expects to start supplying more than 30 TBs to the consumer market using heated magnetic recording technology.