UPDATE 1-Seagate factories running amid Thailand floods

Thu Oct 20, 2011 8:15pm EDT

* Seagate says running at capacity in Thailand

* Stock rises after hours

* Warns of supply chain constraints

By Noel Randewich

SAN FRANCISCO, Oct 20 (Reuters) - Seagate Technology said its factories in Thailand were running full capacity after widespread flooding, and its stock rose more than 8 percent.

The company, which vies with Western Digital for the title of world's largest maker of hard drives, added that it was working with various component suppliers to rebuild its supply chain.

"We expect to experience significant impacts to our production levels, while our suppliers work to get their businesses up and running," Chief Executive Stephen Luczo told analysts on a conference call.

Still, Seagate expects to ship 40 million to 50 million units in the December quarter, he said. That is almost double Western Digital's estimate of 22 million to 26 million.

Western Digital said earlier this week it had extended the suspension of its operations in Thailand -- which account for an estimated 60 percent of its global output -- as floods brought operations to a standstill.

Flooding in Thailand has killed at least 320 people since July and devastated industrialized areas in the center of the country.

"Western digital's troubles seem to be far worse than Seagate's, and Seagate is likely to gain share in the period before Western Digital can recover," said ThinkEquity analyst Rajesh Ghai.

Seagate also posted quarterly earnings above Wall Street's expectations. It shipped 51 million units in the quarter which ended in September and its revenue rose 4.2 percent to $2.8 billion.

The company reported that net income for its first quarter fell to $140 million from $149 million in the year ago period. Earnings per share rose to 32 cents a share, on a lower number of shares outstanding, from 31 cents a share a year ago.

Excluding items, the company earned 34 cents a share, exceeding the 31 cents a share expected on average, according to Thomson Reuters I/B/E/S.

Seagate's shares rose 8.6 percent to $13.10 in after hours trading, after closing at $12.06 on the Nasdaq.

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Comments (1)
alegh wrote:
I’m not believing it. Search for Seagate SV35 hard drives, and everyone is out of stock. If their suppliers are out of commission, then keeping their plant open is not going to make drive magically fly out the door. It’s admirable to keep giving paychecks to employees, but I think stockholders should do a little more research beyond press releases.

Oct 25, 2011 5:25pm EDT  --  Report as abuse
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