Despite demand for advanced memory solutions across enterprises, cloud and mobile, drive maker Seagate delivered its fiscal Q1 report that recorded $3.49 billion in earnings, a figure which fell below analyst predictions that averaged $3.64 billion.
This resulted in Seagate stock dropping as much as four percent in value following the announcement.
While Seagate CEO and chairman Steve Luczo said the earnings were “solid”, he made note of some of the challenges in the sector. Luczo stated, “While the challenges of technology transitions and macro uncertainty are driving us to manage our business conservatively, we remain focused on the fact that the demand for exabytes of storage continues to increase.”
Prior to the earnings statement, investor news site Motley Fool had reported that analysts had been of differing opinions, with many wondering if Seagate would be able to fully benefit from growth in cloud computing.
The major event in the storage sector was Western Digital’s recent $685 million acquisition of Virident, a company that designs and builds computer data storage products. Despite speculation that Seagate would attempt to acquire data center flash-memory technology provider Fusion-io, it has not made any such moves.
Seagate is pursuing its own technology like Shingled Magnetic Recording, which is designed to eventually boost standard hard drive capacity to as much as 20 TB.
In the Monday earnings call, Luczo noted that the company is currently shipping a “significant volume” of drives using SMR technology, and that SMR and flash technology is being incorporated into additional products.
Luczo remarked that “data growth and demand for storage is continuing at a pace that is higher than what the drive industry infrastructure is capable to produce.” Seagate estimates that approximately 60 percent of this data will be stored in both home and enterprise cloud environments by 2020.
Luczo also drew attention to an enterprise-level NAS offering in partnership with LaCie, and the new Seagate Kinetic Open Storage Platform “designed to simplify data management and improve performance and scalability while lowering the total cost of ownership of cloud computing.” Seagate is also creating ultra-thin hard drives for use in devices like tablets.