Seagate lowers Q1 FY2023 revenue forecast as mechanical drive sales continue to decline

Mechanical hard drive sales have been declining recently as solid state drive prices have fallen and the PC market has shrunk. Yesterday, mechanical hard drive maker Seagate Technology announced that it is lowering its revenue forecast for the first quarter of fiscal year 2023, with sales expected to decrease by about $300 million (about RMB 2.07 billion).

Seagate now expects sales in the first quarter of fiscal 2023 to be between $2.0 billion (approximately RMB 13.8 billion) and $2.2 billion (approximately RMB 15.18 billion), compared to a lower estimate of $2.35 billion (approximately RMB 16.215 billion) to $2.65 billion (approximately RMB 18.285 billion), Seagate Technology said.

In the statement, Seagate CEO David Mosley said that Seagate's business has been impacted by changes in market conditions following the release of fourth quarter and full year 2022 results in July, such as weak economic trends in certain Asian regions that have exacerbated reseller inventory pressures and caused supply chain problems.

In addition, international companies and domestic cloud customers in the U.S. have become more cautious about consumer spending in a time of macroeconomic uncertainty. Seagate Technology said these changes will not only impact Seagate's revenue, but also Seagate's profit, resulting in non-GAAP earnings per share that will be significantly lower than the previously expected $1.20 (approximately RMB 8.28). In response to this situation, Seagate will adjust by reducing production, lowering expenses, and slowing down investment plans for 2023, among other measures.

Market research firm StorageNewsletter released data on Aug. 17 showing that in the second quarter of this year, global mechanical hard drive shipments were 44.65 million, down as much as 15.4 percent from a year earlier. Among them, Seagate shipped 19.88 million blocks in the second quarter, down 13.5% from the previous quarter.