Seagate FY 3Q15 Earnings Call Notes

Macro and PC weakness increased in FY3Q

“As we indicated in our business outlook in January, challenges from macroeconomic pressures in Europe and PC demand were factors we needed to manage through the quarter. The magnitude of these factors actually increased in third quarter, resulting in an impact to our top line revenue beyond our initial expectations, particularly in our EMEA business which was down approximately $100 million sequentially.”

Over 1TB per drive

“Overall storage shipments for the March quarter were 55 exabytes, up 9% year over year, with average gigabytes per drive for the quarter increasing sequentially and continuing to average over 1 terabyte per drive.”

Leader in areal density

“In the retail space, our 2 terabyte 2.5-inch drive still leads the industry in areal density and will be refreshed in the next two quarters to a higher capacity, maintaining our leadership. We look forward to pushing these areal density improvements into the majority of our products in FY 2016.”

Big data, machine to machine computing, cloud all drive storage demand

“Dave. Turning to our business outlook, the long-term trends in data growth, big data analytics, machine to machine computing and public and private cloud deployments continued to progress in an encouraging manner. Seagate is expanding and investing in its storage technology product and solutions portfolio to align competitively with these market dynamics and capitalize on exabyte demand growth.”

We’re going to manage the business really really tight this quarter

“So you heard us we’re going to try to manage the supply tightly this quarter and with that, we’re going to run the factories probably not the optimal way. So we’re planning some downside there. But as Steve and Rocky said, we’re quickly poised to take advantage of any opportunity that comes to us and we could get some lift there. But we’re just going to manage supply really tight this quarter. That manifests itself in a short term margin compression, but long term economic benefit by maintaining that supply. So it could be a little better, but we’re managing the business really, really tight this quarter.”

We’re projecting all of our businesses pretty flat with maybe upside to PC

“I think actually all of the different markets seem to be at least as we’re managing going into the quarter flat. I think where there is opportunity for the upside is probably on the PC side, depending again on the OEM’s confidence about back to school pool, which I think they’ll start deciding probably in the month of June. ”

If there’s some shift in macro conditions then you could see some acceleration in June

“I think if there’s some shift in terms of what the macro conditions are, whether or not that’s global or just more confidence about what’s happening in the US, then you could see acceleration in June.”