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Seagate Technology Public Limited Company Message Board

  • chiduravinci chiduravinci Jun 21, 2012 2:40 PM Flag

    Comment about STX's disclosure failings

    The current environment of FUD that the drive stocks face and are trading down in has sadly been aided by STX management and the disclosures they made in April and then early May.

    They should have more affirmatively stated that they would be losing market share as WD supply increased and that there would be a downward bias on margins.

    Instead they went in a complete opposite direction and fanned the analyst flames by projecting the $20 billion in revenue for calendar 2012 and the 30%+ margins exiting the calendar year.

    I hate to say it but those who say that management set up the market for their insider sales to the detriment of the longer term have support for that contention.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Hey Yo Yo,,,
      I think the analysts desire to value STX at a PE of 1.5 is a much bigger issue and is wrought with manipulation all over it......

    • The management teams of STX and WD continue to "distinguish" themselves and feed the selling pressure with their silence in the face of mounting evidence of erosion in end user demand. They will likely say that they didn't want to speak until they fully understood the market dynamics but that is nonsense. I would hope that we see something from one or both of these companies next week as a flash outlook on the quarterly results to put some kind of a floor under the selling.

      Right now the only potential silver lining in the rampant clouds is that sellers have grossly overestimated the extent of the downside in the absence of hard data from the companies themselves.

      • 2 Replies to chiduravinci
      • Chid, relax!
        If you are confident in your own analysis and believe that STX is grossly undervalued would you rather buy at $22 or $32?
        Even better, would you rather STX blow $1BB per quarter buying back at $22 or $32?
        I hope they say nothing until earnings date!
        I am buying now. If I am wrong I lose if I am right I win; simple as that.
        Quickdraw McDraw got it right. Play the short term game and get skinned or show some patience.

      • "silence in the face of mounting evidence of erosion in end user demand."

        yeah, management should repsond to every 2-bit possibility of slight demand change so chid could have sold at $32 instead of $22!

        "silver lining in the rampant clouds is that sellers have grossly overestimated the extent of the downside "

        So managdement should have responded to "gross overestimations" . AND you are buying today. No!

        So you are just babbling here today like the idiot you truly are; absolutely nothing to say and yet you say it anyway.

    • I think we can safely assume he was mistaken.

      But apparently, the "business critical" sub-segment is being underserved and is growing a lot (due to cloud growth).

    • Don't know how he determined his numbers.

      A quick look at overall TAM for the quarter would raise the flag real fast. When TOTAL TAM is ~160M then does "a few hundered million orders", for Enterprise ONLY, make any sense at all?

      What did occur is that the 7.4M Enterprise units shipped by SEAGATE last quarter were up from 6.4M Enterprise units in the prior quarter. ONE million more units; not hundereds of million units.

      CTG

    • Thanks...that ratio is about what I remember from the past but I thought it might be a higher now. Tried to use an elevated figure to demonstrate how far off " a few hundred million orders" are. I think pip meant...a few million drive orders....not a few hundred million orders.

    • Runt,

      Reference made in the most recent 10-Q (30 April 2012) is that 7.4M units of the 60M total were of Enterprise category.

      http://investor.shareholder.com/seagate/secfiling.cfm?filingID=1104659-12-30744&CIK=1137789

      CTG

    • Pip….I’m a little puzzled with your statement that STX may be “a few hundred million units” behind in enterprise drive orders”.
      How did you come up with this figure? Best that I can find…Seagate did not break out their enterprise drive shipments in their conference call. Here is what I found in their comments:

      “We increased our unit shipments by 29% over last quarter, shipping 61 million drives, which equates to approximately 42 exabytes. In the enterprise, the mission-critical market segment market seems to have almost fully recovered, while business-critical continues to be constrained as demand for storage continues to increase rapidly with the ongoing build out of the cloud infrastructure.”

      If my memory serves well…the enterprise represented a lower share of volume but a higher share of revenue/margin. Just guessing here…if the enterprise segment was 35% of total volume and the mission critical portion of this has recovered…how many business critical enterprise drives does that leave? Even if you allow for 20-25 million business critical drive per quarter….the figure of a “few hundred million orders” seems extreme. What am I missing?

    • "BTW, at the going project rate of $0.35/post you only need 9 more posts to buy a Big MAC"

      Thus PROVING the very idiocy of your contention - anyone disagreeing with your idiocy must be a paid by a hedge fund!!!!

      ROTFLMAO@U

      iF ONLY i COULD FIND someone to pay me $.035 everytime I prove you're an irrefutable idiot - easy wealth.

    • Disclosure is a wonderful word... isn't it?

      While everyone is fretting about SSD's, analysts, blah, blah, blah... people should really ask themselves the following questions...

      1.) Why did seagate stop buying back shares in the middle of May?
      2.) Why did seagates shareprice get hammered in the middle of May?
      3.) Why hasn't seagate resumed purchasing shares?
      4.) Why hasn't seagate made a public statement about a quick 30% self-off in its shareprice?
      5.) Why are ALL the analysts singing the same tune about margins falling off a CLIFF for seagate?

      Could it be that something bad happened at seagate, in the middle of May? If so, look for bad margin guidance and shortfall on revenue... and the beat goes on, la-deeda-dee

      G almighty, haven't we all seen this movie before?

      • 2 Replies to perascale
      • 1.) Why did seagate stop buying back shares in the middle of May?

        We don't know that.

        2.) Why did seagates shareprice get hammered in the middle of May

        Several factors:

        1. Over reaction to reports about channel pricing and inventories. FYI, inventories have risen but they are at normal levels for this time of year. Channel pricing still 30% higher than pre flood pricing.
        2. NASDAQ down 400 points due to macro concerns
        3. Seasonal short in the stock

        3.) Why hasn't seagate resumed purchasing shares?

        You don't know that.

        4.) Why hasn't seagate made a public statement about a quick 30% self-off in its shareprice?

        While they usually don't comment on stock price action, next week would be a prime time of a positive or negative preannouncement.

        5.) Why are ALL the analysts singing the same tune about margins falling off a CLIFF for seagate?

        The margins were inflated by the flood and most Analysts assumed they would come down in time. FYI, Huberty's call for a 1000 bpt drop by December which would correspond to a margin of 26.9%. FYI, STX's margins averaged 26.7% in FY08 and FY10. Employing 26.9% margins with Juberty's December drive TAM projection of 185 M units, I get an EPS range of $2.30 to $2.50 for the December QUARTER. In FY10, STX posted record earnings of $3.40/share and stock hit $21.50 equating to a P/E of 6.3. Applying that P/E to the $6 EPS estimate that a number of Analysts have for STX, sans flood effects, gives you a $38 target price.

        FYI, in early May, Noble Analyst Mark Miller told investors to take profits over concerns that there would be knee jerk over reactions to inventory levels, pricing, and the drive TAM as the industry came back to normal conditions?

        Maybe he had you in mind?

      • But again perascale, why has WD therefore not said "we're ok; why are you taking it out on us too?" They don't care that their market cap is getting hammered to the same degree (as distinguished from what happened in 2010 when STX did have its specific product issues and WD's stock gapped out ahead of STX's)?

        Also, you do not know that STX has suspended its stock repurchases unless you somehow have possession of that information confidentially in which case you ought not to be disclosing that.

        Morgan's comments today about margin fall off were in no way STX specific; it was an industry comment applicable to WD as well.

        I continue to think that you're barking up the wrong tree but I agree that the management of both STX and WD are doing their shareholders no favor by standing by silent if they possess discrete information to support dramatic shortfalls from their quarterly guidance.

        Of course, Huberty carefully covers her butt in case she's wrong by saying that the supposed negative trends will not materially impact this quarter's results because of LTAs in place and pricing being set earlier in the quarter so maybe, just maybe, nothing has fallen off any cliff quite yet.

        But there is a depression ahead on the horizon that must be the top of the cliff so get out now while you still have land to turn left, right or go backwards. The end is near, at least until late August, when it isn't any longer.

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