Seagate 3Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we shipped a record 48.7 Exabyte’s of storage up 14% year-over-year and averaged a record 875 gigabytes per drive across our portfolio up 19% over last year.”

“Looking out to 20-20 we believe that data growth and demand for storage is continuing out of pace that is higher than what the drive industry, infrastructure is capable to produce and we estimate that approximately 60% of this data will be stored in both home and enterprise cloud environments.”

“We are pretty confident in our cloud near line portfolio right now. And we look forward to the product launches that are coming next year”

” we are starting to focus a lot more in revenue market share and exabyte market share and we feel that in certain segments it just didn’t make sense to participate given the rather lackluster revenue boast up would have provided us maybe margin pressure.”

“the purchases by the call service providers or internet service providers or any of the big web based companies that are they are very choppy and we expect that you know over the last several quarters so that these large volume orders that they can they come and go in big blocks and sometimes those companies are buying from our traditional OEMs and sometimes they shift their purchasing to direct kind of depending on what type of architectures they are deploying. So I think it’s a bit early to kind of get a read on how that’s going to play out consistently in fact it’s my personal belief that the traditional OEMs are probably going to reestablish themselves pretty effectively in this marketplace just because their go to market capability.”

“we talked a few quarters ago about estimating our cloud business at somewhere around 10% to 12% and now it continued to escalate, and probably 15% to 20% because some of its direct and some of its indirect”

“we think unit TAM probably trends as it has over the last several quarters, which seems to be this kind of 140 give or take like we said I think the last call and the call before that whether or not when you are within 10 million units of either side of that type of TAM for the drive industry, now that’s the things that the industry can manage pretty easily given the way we are producing.”

“I think that just the architectural trends that we see one is the continued advancement of mobile technologies and then the network effect that, that has on where data is created and stored doesn’t seem to us there would be any trend to break away from that. Hopefully, we are some of the new mobile products. You get an even greater network effect, because maybe there is more endpoints of people sharing which content”

“we don’t really see any big macro changes negative or positive and we don’t really see any shifts away from the mobile and cloud future that we have been pretty solid on speaking to. So I think you are going to see relatively flat TAMs with the shift to increasing capacity per drive, which of course were the vertically integrated drive companies means absorption in heads and disc, which is good for us. And then the higher capacity drives of course are higher value-add technology as they are harder drives to making harder drives to test.”

“we’re hopeful with the new design, the [PC] OEMs are coming out with well to stimulate consumer demand but it’s still just a pretty murky segment of the market and that’s why I think we’re very selective and cautious about how we continue to look at the client level of the marketplace.”

“I think for Seagate, certainly, we have always targeted the enterprise SAS market as one that we believe we have a competitive advantage in value-add as a result of our experience in the higher end compute market as it exist. Obviously, Hitachi has the same advantage. So I think relative to some of the other players that haven’t been as exposed to those enterprise workloads as we have, the drive industry has kind of a natural advantage and I could see that those shares reflect what we see in the mission-critical space.”

“I think the SATA space gets a little more confusing just because it’s currently under a lot of price pressure from the people that control media and then the PCI market space whether or not you call that storage or fast memory is also I think extremely challenged right now by a lot of competitors in the space. And while there is value-add to the software, the companies that are providing the media I think are making it difficult for anyone to really have an attractive margin there. So for us, we are really focused on enterprise SAS.”