CUPERTINO, Calif. (AP) — Seagate Technology PLC warned Thursday that its quarterly revenue will fall below expectations, after shipping fewer hard drives than expected partly because of a quality issue with a supplier.
Chairman and CEO Steve Luczo said the shortfall is linked to Seagate's failure to grow its market share. He said Seagate pulled back on shipments in response to the industry recovering faster than expected from supply chain problems. He also pointed to a supplier quality issue with one of Seagate's business product lines that curbed shipments by about 1.5 million units and drove its margin below target.
"While this disruption to our business was disappointing, we acted quickly and conservatively by suspending shipments of the affected products. We have resolved the issue and have resumed fulfilling our supply commitments to customers," Luczo said.
The company forecast revenue of $4.5 billion for its fiscal fourth quarter ended in June. That's short of its own expectations for at least $5 billion in revenue and analysts' consensus estimate of $4.84 billion, according to FactSet.
The company had planned for gross margin, which measures profitability, of at least 34.5 percent. But Seagate now expects to report 33.6 percent gross margin.
Seagate, which will post quarterly results on July 30, said it expects "record" unit shipments for the June quarter of about 66 million, maintaining approximately 42 percent market share. Luczo said the company is adjusting its production and inventory planning in light of a relatively flat market, and making modest improvements to its product mix. Seagate expects average selling prices and margins to remain "relatively stable" in the September quarter.
Shares finished the regular session down 5 cents to $25.08. They shed 62 cents, or 2.5 percent, in after-hours trading.
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