Notes

Seagate Technology (STX) engages in the design, manufacture, and marketing of disc drives for enterprise, desktop, mobile computing, consumer electronics, and branded solutions markets of the disc drive industry. The company produces a range of disc drive products for enterprise applications, such as Cheetah SCSI/SAS/Fibre Channel Family, Savvio SCSI/SAS/Fibre Channel Family, and Barracuda ES SATA Family, which are primarily used in enterprise servers, mainframes, and workstations. It also produces U Series X and Barracuda ATA/SATA family disk drives for desktop applications; Momentus ATA Family disk drives for mobile computing applications. In addition, the company produces Barracuda ATA/SATA Family, Momentus ATA, and ST1 ATA/Compact Flash/USB for consumer electronics applications, which are used in digital video recorders, digital music players, and gaming devices. Further, it offers branded solutions products, such as disc drive products for use in various home and office storage appliances, and applications. Seagate sells disc drives primarily to original equipment manufacturers (OEMs), as well as to distributors who sell its disc drives to small OEMs, dealers, system integrators, and retailers worldwide. It has a strategic relationship with VolumeShield

Seagate's market share is roughly 35% (the largest).

This article gives a good overview of directions in data storage:
http://www.internetnews.com/storage/article.php/3723186

Seagate has been aggressive in developing hybrid disk-flash drives:
http://www.pcmag.com/article2/0,2704,2251612,00.asp

Other trends: increasing broadband use encouraging people to download larger files, requiring larger drives; increasing use of mobile devices requiring disk drives (but these could be prime candidates to switch to flash drives).

However, it's not clear how a strong shift toward flash-based storage
would affect Seagate.

29JAN08 - $20.80

VALUE
Forward P/E (fye 29-Jun-09): 7.47
PEG Ratio (5 yr expected): 0.54
Price/Book (mrq): 2.17
Enterprise Value/Revenue (ttm): 0.93
Enterprise Value/EBITDA (ttm): 4.98

Half the book value is intangible. Otherwise, the valuations are great. It's a cheap company.

GROWTH
Earnings: Current Qtr. 36.2%. Next Qtr. 44.7%. This Year 91.4%. Next
Year 4.1%. Next 5 Years (per annum) 14.55%
Sales: This Year 15%. Next year 7.4%

Note: Seagate's fiscal year ends in June, so "Next Year" is JUN 08 -
JUN 09.

RATINGS
*Schwab: A
*Goldamn-Sachs: Buy/Neutral
*S&P: 5 stars
*Market Edge (technical analysis): Avoid
Most analysts have 1-year target price between $26 and $30.
No insider buying, plenty of selling at $25 and higher.

Thoughts: Buy now for the buy & hold approach (or wait for the technical analysis to improve). Even though the growth estimates for next year are mediocre, the forward PE for next year is a nice low 7.5. Various trends favor Seagate: the only reported strength in consumer spending nowadays is in consumer electronics; disk is becoming competetive with tape for the large-scale backups needed by business. Growth estimates have been pretty unreliable for many companies, but Seagate's last report was in-line with analyst estimates, and the industry seems to have solid, predictable earnings ahead. It ain't gonna write down sub-prime mortgage losses.

8APR08 - $21.74

From Yahoo...
Market Cap (intraday): 11.46B
Enterprise Value (8-Apr-08): 11.78B
Trailing P/E (ttm, intraday): 8.11
Forward P/E (fye 29-Jun-09): 7.52
PEG Ratio (5 yr expected): 0.55
Price/Sales (ttm): 0.93
Price/Book (mrq): 2.24
Enterprise Value/Revenue (ttm): 0.96
Enterprise Value/EBITDA (ttm): 5.185

GROWTH
Earnings. Current Qtr. 46.8%. Next Qtr. 52.6%. This Year 97.9%. Next Year 4.3%. Next 5 Years (per annum) 14.5%
Sales. This Year 15%. Next Year 8%

RATINGS (changes)
Schwab: B
Market Edge (technical): Buy

24OCT08

Seagate misses expectations for earnings and revenue. A concise writeup:
http://www.247wallst.com/2008/10/seagate-from-gr.html#more

23JAN09 - $3.11

Seagate hit a 5-year low. See my brief note about 5-year mean-reversion.

Article:
http://www.thestreet.com/_yahoo/newsanalysis/hardware/10459304.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

---

top of page