The key rival of Lake Forest-based Western Digital Corp. on Monday offered a better-than-expected outlook for the rest of the year, a week before Western Digital itself is set to report results and a forecast.
In an earnings preview, Northern California’s Seagate Technolgy LLC said it does not expect sales to decline as much as previously predicted on stronger demand for certain types of drives.
The move suggests a bit of recovery for the disk drive industry as a whole.
Scotts Valley-based Seagate said sales for the three months through April 3 totaled $2.1 billion, well ahead of its previous forecast of $1.6 billion to $2 billion in revenue.
Analysts, on average, are looking for Seagate to post a loss of roughly $187 million on sales of $1.8 billion.
Seagate is set to report March quarter results on April 21.
The forecast did have one troubling element: a lower profit margin than analysts were expecting, reflecting weak demand from corporate customers and stronger sales of lower-priced products.
In the same announcement, the company said it plans to continue its long restructuring campaign, including halting dividends and reworking its debt.
“With each passing month, Chief Executive (Steven) Luczo continues to check off the items necessary for a Seagate turnaround,” said Richard Kugele, a Needham & Co. analyst in Boston.
Kugele estimates that Seagate should turn a profit again by the end of the year.
Wall Street keeps a close eye on Seagate, the world’s top maker of disk drives, to see how No. 2 disk drive maker Western Digital might fare.
For the three months through March, analysts are looking for Western Digital to post profits of $22 million in sales of $1.5 billion.
Western Digital, which had a recent market value of about $5 billion, is set to report results for the March quarter on April 23.
Last week, JPMorgan Chase & Co. analyst Mark Moskowitz upgraded Western Digital to “neutral” from “underweight” and boosted his price target.
He said in a note to clients that “hard disk drive demand trends seem to have sidestepped a worst-case scenario so far.”
Moskowitz is a bit bearish on Seagate, however.
He downgraded its stock to “neutral” from “overweight” and lowered his price target.
