High HDD Prices Result in Record Sales at Seagate

The company said it expects to report record sales of about $4.5 billion for the second calendar quarter (fiscal Q4) of this year, based on shipments of 66 million drives and aggregate storage volume of 45 exabytes.

In comparison, Seagate shipped reported $4.4 billion revenue for the previous quarter (calendar Q1 2012), 61 million sold drives and 42 exabytes of storage. Compared to last year, Seagate shipped 52 million drives and 33 exabytes in the second calendar quarter of 2011 (prior to the Thailand flood, which happened in October 2011).

On a year-to-year basis, Seagate says it has seen a 21 percent increase in HDD shipments for the second quarter. Revenue climbed in the same timeframe by 34 percent and non-GAAP gross margin almost doubled from 18.8 percent to 33.6 percent

Still, Seagate did not reach its original forecast. "The June quarter’s shortfall was due primarily to two factors. First, we did not achieve our planned market share growth as we reduced shipments in response to the industry’s faster than expected recovery from their supply chain disruption," said CEO Steve Luczo in a statement. "Second, we experienced an isolated supplier quality issue that affected one of our enterprise product lines. This product issue impacted enterprise product unit shipments by approximately 1.5 million units and drove our non-GAAP gross margin below our targeted plan. While this disruption to our business was disappointing, we acted quickly and conservatively by suspending shipments of the affected products. We have resolved the issue and have resumed fulfilling our supply commitments to customers."

Seagate previously expected revenues of about $5 billion and non-GAAP gross margin of at least 34.5 percent.

  • nforce4max
    It would be nice if prices dropped further than they have from last year's highs.
  • daglesj
    May I just say since the unnecessary and profiteering price hikes last year, I haven't bought one single HDD from the likes of Seagate and WD.

    I have been buying SSDs for myself and customers since. They love them.

  • maqsabre
    i guess, creating artificial scarcity works
  • joex444
    If a flood wipes out your manufacturing plants, how do you ship more than before the flood? According to this business theory, floods for everyone!

    Another example of how unemployment is still sky high because companies are saying they can't afford to hire people. Yet they report record profits, which I think is the definition of being "able to hire."
  • outlw6669
    How about dumping some of your record profits to increase your 4TB drive production?
  • Drayeon
    If the flood disrupted 50% of their usual shipments from last year. That would mean that this year they would have to ship 150% of the normal rate from 2 years ago to keep up with amount that they would have sold. Which is why they can ship more while prices are still high.

    And to the people saying theres no regulation. Try starting a bussiness. Once you see the thousands of pages of stupid regulations it will make you want to throw up. Congress and all their hundreds of organizations pass hundreds of laws daily regulating more. Enough to fill 3 semi trucks of paper a year.

    Democrating Senator George Mcgovern was famously quoted when he tried to start a business in Connecticut as saying If I had known how hard it was to start a business due to the amount of regulations I would have worked to get rid of them while in office instead of making them.

    Just because you hear someone took one page of regulations off the book at some point doesn't mean that congress isn't putting out several hundred pages a day to make up for it.
  • DRosencraft
    It should be noted that it was WD whose plants were hard hit by the floods, not Seagate or the others. WD was the one that had a relatively high concentration of plants in that area. Seagate's claim at the time, which is partly backed up by these numbers, is that demand on their side went up since WD could no longer fill the aggregate volume for HDDs. This is where the whole price-fixing conspiracy theory comes from. WD raised prices after the floods because they lost manufacturing capacity and needed to dissuade high volume purchasing just so they wouldn't themselves run out. Seagate, who lost little to no manufacturing capacity, raised prices to also dissuade high volume purchasing as they tried to fill in the slack left by WD. They ramped up their own production to take advantage.

    At this point you wont see Seagate's prices drop until WD's prices drop. It actually makes a lot of sense for us as consumers to endure it this way. The alternative is that Seagate drops it prices to where they probably should be, and WD dies as a company from being unable to match Seagate's price. Don't pay too much attention to Seagate's numbers. Look at the overall total quarterly shipments of HDDs, and the average price. But, no one is probably going to listen to me, or do the investigating themselves, so I'll probably get down voted to oblivion for "defending" Seagate ad WD. Oh well.
  • Dark Lord of Tech
    I bought 2!
  • NuclearShadow
    I haven't bought a single HDD since the price hikes occurred and I have been needing another one for sometime now. I have the money but I refuse to pay at such a hike in prices. Now that I have seen this I am glad that I have not, records profits at these current prices will only encourage the price to stay up.
  • garrick
    It was Thailand not Taiwan...