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Why Seagate Technology Shares Got Clobbered Today

By Evan Niu, CFA – Apr 26, 2017 at 11:15AM

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Sales fell slightly short of expectations in the fiscal third quarter.

What happened

Shares of Seagate Technology (STX) are getting slammed today, down by 16% as of 10:45 a.m. EDT, after the company reported fiscal third-quarter earnings with sales falling short of expectations.

So what

Revenue during the quarter totaled $2.67 billion, while analysts were modeling for a slightly higher $2.71 billion up top. On the other hand, non-GAAP earnings per share came in at $1.10, which registered as a beat compared to the $1.07-per-share adjusted profit that the market was expecting.

Person using Seagate's Backup Plus Ultra Slim

Image source: Seagate Technology.

Adjusted gross margin was 31.4%, and operating cash flow of $426 million also topped expectations.

Now what

CEO Steve Luczo said the results "reflect a stable demand environment" and that Seagate is seeing "momentum in the stabilization of our business model." The company also raised $1.25 billion in investment-grade debt during the quarter, bringing total cash and short-term investments to $3 billion by quarter's end. Seagate paid $186 million in cash dividends during the quarter, and announced that its board of directors has approved a quarterly dividend of $0.63 per share that will be paid to shareholders of record as of June 21, 2017.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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