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Seagate ups sales outlook, becomes go-to hard drive maker amid shortages

For the March quarter, Seagate said that it expects to deliver revenue of $3.75 billion. Wall Street was expecting revenue of $3.32 billion.
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Written by Larry Dignan, Contributing Editor on

Seagate said its sales will be stronger than expected as it is one of the few hard drive makers to navigate the floods in Thailand successfully.

Flooding in Thailand has wreaked havoc on the hard drive supply chain and shortages are likely into 2012. However, Seagate facilities were largely unscathed, but the company said that its "ability to manufacture hard disk drives has been impacted due to external component supply constraints."

Nevertheless, Seagate's outlook is looking strong. Seagate said that it will ship about 43 million units in the December quarter (fiscal second quarter) with revenue of $2.8 billion.

Wall Street was expecting revenue of $2.69 billion.

Seagate also said that its margins would be 150 to 300 basis points ahead of its historical range of 22 percent to 26 percent. Seagate's outlook excludes the acquisition of Samsung's hard drive business.

For the March quarter, Seagate said that it expects to deliver revenue of $3.75 billion excluding Samsung. Wall Street was expecting revenue of $3.32 billion.

Overall, Seagate is poised to gain and appears to be the go-to hard drive manufacturer amid tight supply. Indeed, Seagate on Tuesday launched its second-generation solid state hybrid drive for laptops called the Momentus XT.

Due to the Thailand flooding, Seagate said that hard drive supplies will be "significantly constrained for several quarters." Seagate is expecting industry shipments of 110 million to 120 million units. From there, the industry's ability to manufacture and ship hard drives will improve through 2012.

"While this may alleviate some of the unit demand shortfall, it is expected that some companies will optimize unit shipments by manufacturing lower component count/lower capacity hard disk drives; thereby, only modestly offsetting the growing petabyte shortage," said Seagate in a statement. "Because demand is estimated to significantly exceed supply during this time, pricing is expected to remain stable."

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