Please ensure Javascript is enabled for purposes of website accessibility

Why Seagate Technology Stock Tanked Today

By Evan Niu, CFA - Jul 29, 2020 at 12:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The hard drive specialist reported disappointing earnings and issued soft guidance.

What happened

Shares of Seagate Technology (STX) have tanked today, down by 10% as of 12:05 p.m. EDT, after the company reported fiscal fourth-quarter earnings. The results missed expectations and guidance was underwhelming.

So what

Revenue in the fiscal fourth quarter was $2.52 billion, shy of the $2.62 billion in sales that analysts were expecting. That resulted in adjusted earnings per share of $1.20, missing the consensus estimate of $1.23 per share in adjusted profits. The computing storage tech company blamed the shortfall on the coronavirus pandemic.

Red stock chart going down

Image source: Getty Images.

"The June quarter was led by robust cloud and data center demand, which drove record exabyte shipments for our nearline mass capacity drives and strongly contributed to the Company's overall revenue and solid free cash flow generation," CEO Dave Mosley said in a statement. "However, continued economic uncertainty and COVID-19 related disruptions impacted demand in other key end markets including video and image applications, mission critical and consumer markets and also impacted profitability as we incurred higher logistics and labor costs which together weighed on our fourth quarter results."

Now what

Seagate's outlook was also below Wall Street's forecasts. Revenue in the fiscal first quarter is expected to be in the range of $2.1 billion to $2.5 billion, with adjusted earnings per share of $0.70 to $1.00. Analysts are currently modeling for $2.6 billion in revenue and $1.27 per share in adjusted earnings.

"Looking ahead to the September quarter, we expect soft demand from the OEM and enterprise market," CFO Gianluca Romano conceded on the conference call with analysts.

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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Seagate Technology plc Stock Quote
Seagate Technology plc
STX

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.