1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Holly LaFon
Holly LaFon
Articles (7793) 

David Einhorn on Seagate Technology

May 31, 2012 | About:

From David Einhorn's first quarter 2012 letter:

Seagate Technology (NASDAQ:STX) was the other significant winner during the quarter. It is STX's normal practice on earnings calls to provide financial commentary looking ahead only one quarter. However, in January, STX shared its financial outlook for all of calendar year 2012,forecasting revenues of $20 billion. The prior consensus was for less than $15 billion. A good chunk of the increased forecast comes from higher pricing enabled by the industry shortage following the floods in Thailand last year.

STX also announced that it would be using some of its excess cash to ramp up its stock repurchase program, with a target of decreasing outstanding shares by 25%. When business conditions eventually normalize, the lower share count will enable STX to generate higher earnings per share.

Though the shares advanced from $16.40 to $26.96 during the quarter, the share price remains at a very low multiple of both near-term and longer term earnings. Based on our somewhat more conservative revenue outlook in 2012, we expect earnings to reach $10-$15 per share this calendar year, before settling at an average of about $5 per share in future years when the industry shortage will have ended.


Rating: 5.0/5 (3 votes)

Comments

Please leave your comment:


GuruFocus has detected 4 Warning Signs with Seagate Technology PLC $STX.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by Holly LaFon


User Generated Screeners


pepebellMagic Formula Mod
HOLKLSUNew Top 10 Group NON Trends Q3
liuzishuNon-div M-score
blomgGreenblatt
pbarker46Momentum
merknt84div5
merknt84div4
merknt84div3
merknt84div2
DANGORDON**** LOW PE AND PEG
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK