Seagate shares tumble as slowing PC sales hit outlook

Reuters News
Posted: Jul 31, 2012 10:38 AM

(Reuters) - Seagate Technology Plc's shares fell as much as 8 percent on Tuesday, after the hard disk drive (HDD) maker projected first-quarter revenue below estimates on slowing sales of personal computers.

The company has been hit by slowing economic growth and shaky sales of PCs as consumers shift toward tablets and smartphones.

FBN Securities cut its price target on Seagate's stock to $32, saying selling prices had started to decline from their peak levels after the Thailand floods last year and inventory had started rising.

Seagate's weak outlook follows an upbeat fiscal 2013 forecast from rival Western Digital Corp, which is banking on strong sales to big businesses.

The company forecast first-quarter sales of about $4 billion, below analysts' estimates of $4.62 billion, according to Thomson Reuters I/B/E/S.

"Our checks continue to show caution from PC vendors while the industry is still going through major product transitions," Barclays Capital analyst Ben Reitzes said.

Reitzes, however, raised his price target on Seagate's stock, saying the company represents a good investment in the longer term as it has raised its dividend and has said it will buy back shares.

Shares of the company fell 8 percent to $27.90 in early trading on the Nasdaq on Tuesday. The stock has dropped 7 percent since touching a life high of $32.55 on May 1.

(Reporting by Siddharth Cavale in Bangalore; Editing by Viraj Nair)