Hard disk drive maker Seagate Technology plc (STX), Wednesday reported a plunge in profit for the third quarter, as revenues plummeted and margins shrunk amidst weak sales of PCs. Nevertheless, both earnings and revenues for the quarter came in ahead Wall Street expectations. Shares of Seagate rose five percent in extended trading, following the news.
Dublin, Ireland-based Seagate's third-quarter profit plunged to $416 million or $1.13 per share from $1.15 billion or $2.48 per share last year.
Adjusted earnings for the quarter were $464 million or $1.26 per share for the quarter. Analysts polled by Thomson Reuters estimated earnings of $1.15 per share for the quarter. Analysts' estimates typically exclude special items.
Seagate's revenue for the quarter dropped to $3.53 billion from $4.45 billion a year ago. Analysts estimated revenues of $3.38 billion for the quarter.
Gross margin, or percentage of revenues left after deducting sales costs, decreased to 26.9 percent from 37 percent last year.
Seagate, like its peers, have been negatively impacted by the declining sales of personal computers as consumers now prefer to use smartphones and tablets, which doesn't require hard drives. The company has turned its focus to the cloud storage data business, expecting to tap into the market.
Chief Executive Steve Luczo said, "The continued advancement of cloud, mobile and open source computing are trends that are shifting data volumes toward personal and corporate cloud environments, creating tremendous opportunities for Seagate's leading storage technology portfolio."
Seagate also approved a quarterly dividend of $0.38 per share, payable on May 29 to shareholders of record May 15.
STX closed Wednesday's trading at $36.94, up $0.24 or 0.65%, on the NYSE. The stock, further gained $1.91 or 5.17%, in after hours.
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