Seagate Sees Drive Shortages Boosting Revs; Shrs Spike

Seagate shares are trading higher in the late session on better-than-expected revenue guidance for both the December and March quarters.

The disk-drive company noted that due to the recent flooding in Thailand, it sees industry shipments in the December quarter of 110 million to 120 million units, well below unconstrained demand. �The company believes the industry�s ability to manufacture and ship hard disks drives will gradually improve throughout calendar 2012,� Seagate said in a statement. �While this may alleviate some of the unit demand shortfall, it is expected that some companies will optimize unit shipments by manufacturing lower component count/lower capacity hard disk drives; thereby, only modestly offsetting the growing petabyte shortage. Because demand is estimated to significantly exceed supply during this time, pricing is expected to remain stable.�

Seagate also again noted that unlike rival Western Digital, its own Thai factories have not been directly affected by the flooding, but that �the company�s ability to manufacture hard disk drives has been impacted due to external component supply constraints.�

For the December quarter, Seagate now expects shipments of 43 million units and revenue of $2.8 billion. Gross margin is expected to be 150-300 basis points above the high end of the company�s long-term target range of 22%-26%. The previous Street consensus revenue estimate was $2.64 billion.

For the March quarter, the company expects shipments to be up sequentially, with revenue of at least $3.75 billion and gross margin at least 300 points above the 22%-26% target range.  The Street had been forecasting revenue of $3.24 billion.

The company said it continues to expect to complete the acquisition of Samsung�s hard drive drive business by the end of December.

In late trading, STX is up$1.50, or 9.4%, to $17.49.