Impressive Though Interesting Guidance from Seagate Technology
After hours, Seagate Technology (STX) provided a financial update that included dramatically raising guidance for the next 2 quarters. Considering the flooding in Thailand impacting the industry, first glance would suggest that STX is benefiting from other customers being more impacted. It is hard to gather the true benefit considering STX claims to be impacted by external component supply constraints even though their factories were not impacted by floods. The company guided to $2.8B versus the $2.64B analyst estimate for Q4 and at least $3.75B for Q1. On top of that, STX guided to higher gross margins by up to 300 basis points for each quarter. So profits should be off the charts compared to estimates. The question remains whether these are one time gains from the floods or just higher demand for disk drives. Maybe some analysts more familiar with the sector will be able to opine on that subject. Regardless, the company trades at some absurdly lo...