Seagate Raises Estimates But Halts Dividend Payout
Shares of Seagate Technology ( STX) are down nearly 7%, despite the company announcing it expects fiscal third-quarter sales to surpass its earlier forecast. Third-quarter sales are expected to be about $2.1 billion, exceeding the earlier forecast of $1.6 billion to $2 billion. For the fourth quarter, the company expects revenue in the range of $1.9 billion to $2.2 billion, above the consensus for $1.86 billion. Despite the positive news, the company also announced it was halting dividend payouts, which will cut $60 million a year from its outflow. The company reports on April 21. Shares of Seagate traded near its all-time high of $30 in 2007. The stock has technical support in the $3 to $4 price area. If the shares can firm up, we see overhead resistance around the $7.50 to $8.50 price levels. We will no longer be rating the stock, but will continue to monitor the news flow closely.
MEMC Electronics First-Quarter Results to Fall Short
Shares of MEMC Electronic Materials ( WFR) are down nearly 14% in early trading after the maker of silicon wafers used in making chips and solar cells said its first-quarter revenue fell $11 million below the expected $225 million. Management now expects its gross margin for the quarter to be 9% of sales, compared to its previous forecast for a decline somewhere in the range of 20%. Shares of MEMC are way off the all-time highs of $91 hit in December 2007. The stock has near-term technical support in the $10 price area. If the shares can firm up and shake off today's news, we see overhead resistance around the $20 to $22 price mark. We do not currently rate this non-dividend paying stock, but we do follow it closely.