Please ensure Javascript is enabled for purposes of website accessibility

Is This the Recession's Next Tech Victim?

By Tim Beyers - Updated Apr 5, 2017 at 8:01PM

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

Lower guidance isn't what investors are looking for.

Ford and General Motors may have the headlines now, but the recession has hit tech almost as hard. Among the recent losers:

Now you can add hard drive maker Seagate (NYSE:STX) to the list. At this week's Barclays 2008 Global Technology Conference, executives lowered fourth-quarter revenue guidance to $2.3 to $2.6 billion. Seagate had previously expected $2.85 billion to $3.05 billion, The Wall Street Journal reports.

Reuters, meanwhile, says that Seagate will shutter some facilities for the holidays to save money. CEO Bill Watkins didn't try to spin the news. "We actually had a pretty decent October and we started seeing the pullback about in the second week of November," Watkins said. "There is a lot of fear out there. I don't think anyone is very comfortable about where they are."

And yet our 120,000-strong Motley Fool CAPS community is comfortable betting on Seagate:



CAPS stars (5 max)


Total ratings


Bullish ratings


Percent Bulls


Bearish ratings


Percent Bears


Bullish pitches


Bearish pitches


Note: Data current as of Dec. 11, 2008.

"Seagate is down and disk drives have lost favor. Seagate is so savvy that when Flash equals or overtakes hard drives -- Seagate will acquire one or more of the ailing flash players and win," wrote CAPS All-Star GreatDruid last week.

I'll add that, judging by its historic levels of free cash flow, Seagate should be able to sustain its 9.40% dividend yield, offering a rare margin of safety to tech investors who've become used to cold comfort.

But that's my take. I'm more interested in what you think. Would you buy Seagate at these levels? Would you go short? Let us know using by signing up for CAPS today. It's 100% free to participate.

Get your clicks with related Foolishness:

Microsoft is an Inside Value pick. Akamai is a Rule Breakers recommendation. Try either of these Foolish services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers owned shares of Akamai at the time of publication. Find his portfolio holdings here and a collection of his writings here. Or connect with him on Twitter as @milehighfool.

The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy hopes to reduce its waistline in the New Year.

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
Microsoft Corporation Stock Quote
Microsoft Corporation
$282.40 (0.74%) $2.08
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
$44.98 (-0.10%) $0.04
Akamai Technologies, Inc. Stock Quote
Akamai Technologies, Inc.
$94.91 (-1.52%) $-1.47

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

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.