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Published: Thu, July 14, 2016
Economy | By Melissa Porter

Seagate to slash 6500 jobs despite record shipments

Seagate to slash 6500 jobs despite record shipments

Seagate Technology plc (STX) (the "Company") recently declared selected preliminary financial information for its fiscal fourth quarter and year- end 2016, which ended on July 1, 2016.

On Tuesday Needham reiterated its target price on Seagate Technology PLC (NASDAQ:STX) shares issuing the company with a "Buy" rating.

Thomson Reuters, a distinguished brokerage company, has placed a 52-week price target of $24.16 on Seagate Technology. The Company expects to report HDD unit shipments of approximately 37 million, reflecting approximately 62 exabytes, average capacity per drive of 1.7 terabytes and average selling price per unit of $67 for the fiscal fourth quarter 2016.

Seagate sees a glimmer of hope, but it is going to take much more to recover fully from the beating it took earlier this year when its shipments cratered and it announced a $100 million shortfall. The data storage provider reported $0.22 EPS for the quarter, missing the Zacks' consensus estimate of $0.43 by $0.21.

Seagate credits "better than expected demand for the Company's HDD product portfolio" for the unexpected surge in sales. The company's Q4 revenue came in at approximately $2.65bn, with GAAP gross margin of 25 per cent.

Seagate has been adapting to this change in the way data is stored and the two job cut announcements, in May and this week, are understood to be part of that process, but Steve Luczo, chief executive of Seagate, remains confident about the long term future. This corresponded to 70 job cuts at Seagate's Northern Ireland operations. In addition, computer makers are adopting storage devices based on flash memory chips rather than magnetic disks, a shift that has affected Seagate and other drive makers. The Firm produces a range of electronic data storage products, including solid state hybrid drives (SSHD), solid state drives (SSD), peripheral component interconnect express (PCIe) cards and Serial AT Attachment (SATA) controllers.

Marking the year's biggest IPO and the largest offering of a tech company since 2014, Japanese mobile messaging app Line raised more than $1 billion when it priced its shares Monday. Egan John R is second leading insider shareholder, as of April 30, 2015 the insider owns 1,151,017 shares of the stock.

The positive results represent preliminary figures for the fourth quarter only, a company spokesman said.

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