Published: Tue, July 12, 2016
Economy | By Melissa Porter

Seagate is cutting 6500 jobs and the stock is soaring

Seagate is cutting 6500 jobs and the stock is soaring

Seagate Technology Public Limited Company (STX), an electronic data storage company yesterday reported their fiscal fourth quarter 2016 financial results.

The company only announced two weeks ago that it would terminate 1,600 employees to save US$100 million annually, on top of last September's decision to cut 1,050 jobs.

Seagate Technology PLC has 298,483,000 shares in issue which have a share price of 24.09 giving Seagate Technology PLC a market capitalisation of 7.19B United States dollars.

Revenue difference attributed to better than expected demand for HDD products, gross margin difference attributed to better than expected demand for enterprise HDD products as well as cost containment execution. Despite an improvement from previous estimates, Seagate's projected net revenue for the quarter is around 9% lower on a year-over-year basis, while the non-GAAP gross margin is still short of the company's long term projected margin range of 27-32%. Deutsche Bank AG cut Seagate Technology PLC from a "buy" rating to a "hold" rating and set a $35.00 price objective for the a research note on Wednesday, April 13th.

Seagate (NASDAQ:STX) recently announced preliminary fiscal Q4 results, revising its expected revenue and margin figures upward for the quarter.

"We believe the long-term trend of exabyte storage demand growth exceeding HDD areal density growth remains intact for the foreseeable future. HDD devices are where most data bits eventually reside and our record HDD exabyte shipments in the June quarter, particularly because of enterprise demand, continue to support this thesis", said Steve Luczo, Chairman and Chief Executive Officer. Because of that, Seagate plans on developing its product offerings, technology investment and manufacturing footprint to best serve their customers with the most advanced and cost advantaged HDD products.

The stock's price moved up its 200-day moving average of $73.46. It raised its revenues guidance for the fourth-quarter.

Seagate said it expects to ship 37 million of its hard drives for the fourth quarter.

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