Good and bad news for hard drive manufacturer Seagate. The good news: The company has been delivering the first HDDs with a capacity of 30 terabytes since mid-April 2023, ahead of its competitors Western Digital and Toshiba. The bad news: Seagate closed the past quarter with a minus of 433 million US dollars.
In the 30 TB model, Seagate relies on Heat Assisted Magnetic Recording (HAMR): A laser integrated into the write head heats the magnetic particles at points just below their Curie temperature of around 450 degrees Celsius before writing. This reduces the magnetic field strength required for writing and consequently the required size of the write heads; the bits can shrink.
So far, Seagate has only produced the hard drive in small series and delivers it to corporate partners, i.e. primarily operators of cloud data centers. The first sales should appear in the next business figures. However, depending on the qualification times at the cloud operators and the “macro conditions” on the market, Seagate does not intend to ramp up series production until the beginning of 2024.
Big Loss
In the first quarter of 2023 (third financial quarter for the company). Seagate according to the annual report with 1.86 billion US dollars again slightly less sales than at the end of 2022. The loss of 433 million US dollars already includes a 300 million US dollar fine that Seagate pays to Huawei due to hard drive sales. The quarterly payments do not start until autumn, but are already being booked.
Even without the penalty, the net loss increased from $33 million to $133 million in three months. Seagate attributes this to a stronger than expected downturn in high-capacity nearline hard drives. After all: In the adjusted numbers (non-GAAP), the operating business was still just in the black.
In early 2023, Seagate shipped hard drives with a total capacity of 118.7 exabytes. With a specified average capacity of 8.2 TB, this results in almost 14.5 million HDDs sold.
More minus expected
In the current quarter, Seagate expects a further decline in sales to 1.7 billion US dollars (+/- 150 million) and a net loss of around 20 cents per share. That would currently correspond to a minus of around 41 million US dollars.
Despite the bad numbers, investors can still look forward to a dividend of 70 cents per share. Seagate pays out a total of $437 million. The share collapsed by about 10 percent after the announcement of the business figures.
(mma)
