By Senad Karaahmetovic
Seagate Technology (NASDAQ:STX) announced today that it is slashing its outlook for its fiscal first quarter as it continues to operate in “a worsening macro-economic” environment. Shares are down 6% in premarket Wednesday.
Seagate now forecasts revenue in the range of $2 billion to $2.2 billion, which is down from the prior outlook of $2.35 billion to $2.65 billion. The average analyst estimate is $2.52 billion.
The profit outlook is also in danger with STX previously guiding for $1.20 per share, while the Street consensus is at $1.40.
“Since our earnings call in mid-July, weaker economic trends in certain Asian regions have amplified customer inventory corrections and supply chain disruptions. We have also seen more cautious buying behavior among global Enterprise / OEM and certain U.S. cloud customers amid ongoing macro-economic uncertainties. These external factors are impacting near-term mass capacity demand while continuing to weigh on the consumer centric legacy markets,” said Dave Mosley, Seagate’s chief executive officer.
Vital Knowledge analysts said the warning from STX isn’t “shocking given what HPQ and DELL have said in recent days.”
Still, the guide down suggests “pockets of tech are encountering even worse demand and means certain firms (like INTC, WDC, MU, etc.) may be forced to lower their guidance even further.”
Shares of Western Digital , Seagate’s direct rival in the storage sector, are also down over 4% in early Wednesday trading.