SCOTTS VALLEY, Calif. (
beat Wall Street's revenue estimate in its first-quarter results, boosted by sales of netbooks and desktops.
The firm, which makes hard disk drives, reported revenue of $2.66 billion, down from $3.03 billion in the same period last year, but above analysts' projection of $2.62 billion.
Seagate earned 35 cents a share on net income of $179 million, up from 12 cents a share and $57 million in the year-ago quarter. Analysts surveyed by Thomson Reuters had expected Seagate to earn 47 cents a share, although the company's first-quarter numbers took a $120 million hit from restructuring and other one-time items. This impacted Seagate's earnings by 23 cents a share, though the storage maker enjoyed a healthy gross margin of 24.5%.
Seagate's results were not completely out of the blue. For example, the company recently
its third-quarter sales forecast, citing improving demand for its hard-disk drives.
"At a time when economic conditions remained challenging we are very pleased with the company's financial performance, delivering strong revenues, margins and cash generation," said Seagate CEO Steve Luczo in a statement, after market close. "Although mission critical enterprise demand in particular has yet to recover to historical levels, we benefitted from our time-to-market product delivery to customers integrating our notebook, desktop and enterprise drives."
Seagate, which competes with
, now expects to deliver a long-term gross margin of 22% to 26%, he added.
The company also issued bullish second-quarter guidance, predicting sales between $2.75 billion and $2.85 billion. Wall Street had expected sales of $2.75 billion.
For fiscal year 2010, Seagate forecast sales of more than $10.5 billion and GAAP earnings north of $1.90 a share. Excluding items, the company expects an additional 30 cent earnings boost during the fiscal year. Analysts surveyed by Thomson Reuters had predicted revenue of $10.49 billion and earnings of $1.90 a share.
Storage companies are already reaping the benefit of the IT spending rebound and have been cited as attractive stocks. Like
, Seagate is seen as offering robust top-line
. Analyst firm Goldman Sachs has already predicted that Seagate's disk-drive business will benefit from improving
imminent launch of Windows 7 has also been identified as a potential
for the company.
"We believe that the Windows 7 transition is increasing," said Luczo, during a conference call late Tuesday. Seagate expects to see growth in the PC market during calendar year 2010, he added.
Seagate's shares rose 4 cents, or 0.26%, to $15.59 in extended trading.
-- Reported by James Rogers in New York