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Seagate misses expectations

by on28 January 2014

Cloud growth slowing

Hard-disk drive maker Seagate saw its growth slow in its lucrative cloud storage business, sending its shares down 7 percent in extended trading.

Weakness in the cloud business was due to long-term rollouts by some of its original-equipment manufacturer customers, with shipments down "a couple of hundred thousand units", Chief Financial Officer Pat O'Malley complained. O'Malley said cloud comprised 10-15 percent of its total revenue in the second quarter ended December 27 and he expects the cloud business to contribute about 20 percent to the company's total revenue by the end of the year.

Seagate also forecast current-quarter revenue of $3.4 billion. Analysts on average were expecting $3.46 billion and appear to have been losing ground in the enterprise, which is the higher-margin category. The enterprise category comprises the cloud business, while the client non-compute business provides storage devices for consumer electronics such as gaming consoles and digital video recorders.

Seagate's net income fell to $428 million from $492 million a year earlier. Revenue fell about 4 percent to $3.53 billion.

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