Seagate’s share price plummeted. The company struggles with chip shortages for SSDs, NAS devices and racks. According to its most recent quarterly report, production will decline in the coming months.
The same report forecasts revenue of $2.35 billion in the current quarter, a 24 percent decline from last year. Analysts expected at least 3 billion. Investors reacted to the news.
Share price drops
In the hours following the announcement, the share price dropped by almost eleven percent. “As we enter fiscal 2023, we expect macro uncertainties and non-HDD component shortages to continue pressuring our end market over the near term”, Chief Financial Officer Gianluca Romano said.
By ‘non-HDD components’, Romano refers to any other product in Seagate’s offering. The organization produces SSDs, NAS devices and racks for data centres in the United States and Asia.
There was more than enough demand in the United States, says CEO Dave Mosley. The problem stemmed from supply. “Persistent non-HDD component shortages have led to inventory imbalances, precluding new data center build-outs from being completed”, said the CEO.
In Asia, the situation is different. Demand was lacking. Mosley stated that Asian cloud providers are struggling with the consequences of COVID lockdowns. According to the CEO, this has an impact on “all of the end markets that we serve in the region”.
“We are reducing our manufacturing and production plans, while continuing to focus on driving efficiencies in the factory and across supply chains. We are maintaining prudent cost controls across the business”, Mosley concluded.
Several organisations announced disappointing quarterly results in recent months. Cisco, Micron and SK hynix struggle with shortages and inflation. Microsoft, Google, Meta and Apple prepare for a recession by hiring fewer staff.
In some markets, the trend is opposite. Nokia, Hyundai and ABB performed above expectations in the past quarter. The organizations expect their chip shortage to decline in the coming months.