WDC - Seagate slides even as it unveils cost cutting measures in light of weak Q3 guidance

2023-04-20 09:08:33 ET

Seagate Technology ( NASDAQ: STX ) shares slid more than 4% in premarket trading on Thursday even as the storage company unveiled a new cost cutting initiative in light of weaker-than-expected third-quarter results and guidance.

As part of the new plan, Seagate ( STX ) said it expects to see a run-rate savings of $200M on an annualized basis, starting in the first-quarter of fiscal 2024. It expects to take a pre-tax charge of around $150M as part of the restructuring.

In conjunction, Seagate ( STX ) reported weak third-quarter results, with CEO Dave Mosley placing the blame on a "more elongated customer inventory correction" that resulted in weaker-than-expected demand from a few large customers late in the quarter.

For the period ending March 31, Seagate ( STX ) lost an adjusted 28 cents per share on $1.86B in revenue. Analysts were expecting a loss of 21 cents per share on $1.99B in revenue.

Looking ahead, Seagate ( STX ) expects to generate between $1.55B and $1.85B in revenue, with adjusted earnings per share forecast to be between negative 40 cents and breakeven.

Analysts were forecasting an adjusted gain of 53 cents per share and $2.08B in sales.

Competitor Western Digital ( WDC ) fell 1.8% in sympathy following the results.

Late on Wednesday, Seagate Technology ( STX ) said it had agreed to a $300M settlement with U.S. authorities over shipments of hard disks to China's Huawei which violated export control laws .

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