(Bloomberg) — Seagate Technology Holdings Plc, the biggest maker of computer hard drives, gave a weak forecast for the current period citing “weakening global economic conditions,” sending the stock down more than 10%.
Revenue in the current period will be as low as $2.35 billion, Seagate said in a statement Thursday.
That compares with an average analyst projection of $3 billion. Excluding certain items, profit will be about $1.40 a share, well short of the average estimate of $2.27.
The company also said it’s reducing its production plans to avoid a glut, joining other component makers such as Micron Technology Inc.
in scaling back plans. Seagate is one of the first computer hardware makers to announce results in the current earnings season, but investors have already been bracing for a grim picture.
“Right now, the consumers of the world have decided they’re spending money on other things,” Seagate Chief Executive Officer Dave Mosley said on a call with analysts.
Mosley predicted that demand would begin to improve again in about two quarters.
Under Mosley’s leadership, the company has concentrated on winning orders from companies that offer storage over the internet — so-called cloud service providers.
Such buyers use high-capacity drives that carry bigger profit margins, Seagate executives said.
That effort is continuing to pay benefits. Demand for online storage is still growing, and capital spending by owners of huge data centers remains strong, Mosley said.
He doesn’t expect that market to undergo a drop-off in purchasing, he said.
But spending on consumer products, such as thumb drives, has fallen off rapidly. Seagate now has almost no presence in the laptop and personal-computer market in general, Mosley said.
Seagate shares, which were down 26% this year at the close in New York, fell about 11% in extended trading.
(Updates with executive comments starting in fourth paragraph.)
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