Next is bankruptcy. Look at the financial statements, debt of $600M is coming due, suppliers are being paid at over 100 days from being invoiced, the company is looking to do leasebacks on its real estate for a quick infusion to pay the next few dividends. We know executives are overpaid and some were riffed, but not enough to overcome the extreme revenue decline and the fixed costs of running a manufacturing business. Forget about having money to scale HAMR. This was all CEO and CFO mismanagement. Any other signs of bankruptcy coming soon?
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Waiting for them to realize ample SSD supplies means lower HDD revenues much longer than the couple quarters they expect. Plus, WD is the market share and quality leader by far now. I expect the head count will ultimately be cut by 50% by 2024.
$600m = two quarterly dividend payments + Executive bonuses + Executive travel and sales events for next year
And the company will pay the 600m back over 7 years through leases . Will the company be around in 7 years?
$600 million = Fremont sale + Longmont sale at $300 million each.
Is it difficult to sell an HDD? A company needs it or not and they know the exact cost where an HDD makes sense vs. NAND. Why would sales still have power during this decline? WDC had a great HDD last quarter compared to STX, I would think the EVP of sales would have been fired.
@CherryBlossom - that's some fine a$$ kissing demonstrated. An EVP in charge and nothing the poor CEO can do - that's truly lame and UNBELIEVEABLE!
Dudes and Gals, u have to understand the dynamics before we point the finger. The show is run by the EVP sales these days. He has the CEO’s “ball in hand” and can place it anywhere!! CFO is merely trying to fix the mess - not that he’s a saint, but still better than the EVP sales. I hope the board sees the BullSh-t, hands CEO a new pair of ba--s so CEO can say to BS “U can keep that pair, that’s ur severance!!”
Exactly, if trying to criticize at least know basic finance terms.
@2crb+1jGsV3jO - your arithmetic is AWESOME!!! But you might want to understand the difference in the meanings of REVENUE versus PROFIT!
Kudos to you @1dau+1jGsV3jO, you really did your homework in reading those Q1 results.
The Company is providing the following guidance for its fiscal second quarter 2023:
Revenue of $1.85 billion, plus or minus $150 million
(Source: https://www.businesswire.com/news/home/20221026005040/en/Seagate-Technology-Reports-Fiscal-First-Quarter-2023-Financial-Results)
$1.85 billion - $150 million = (low end) $1.70 billion
oh yes... https://investors.seagate.com/news/news-details/2022/Seagate-Announces-Exchange-Offers-for-Certain-Outstanding-Debt-Securities/default.aspx
Q2 guidance low end is $1.7B revenue at 20% gross margin is $340m gross profit. $345m opex, est after RIF and STX is negative bottom line. Then, pay the dividend. Temp cash inflow from selling TCO/LCO to get to break even. Who said this is not a winning business model?
Rotating storage is not going away, but it will be much, much lower than the CEO's forecast. And adjustments to staffing, real estate, footprint, manufacturing and other areas have to be addressed. Addressed. Someone will also have to bring up cutting the dividend that can't be supported
Seagate will fine, calm down...Its called an economic downturn....look it up...we are not alone. If you think rotating storage is going to go away in the near future, you're in banana land and need to pull yourself together...
Board should get rid of both the CEO and CFO. Throw in the EVP of sales for BS'ing the forecast which was missed by a mile.
With the record Low volume in this qtr, and the layoff payment, this is hard for Seagate to make money this qtr..
Next qtr continue to see red.
And another layoff in sight, let see which CXO got it
For sure. Only question is who goes first, the inexperienced CFO who was not ready for the big seat, or the CEO who believes hard drives solve every storage problems and intimidates staff to raise the forecasts without a plan.
Yep. The company is on a path to insolvency. No more free loans.
Higher interest rates will only hurt expenses further and require further cost cutting, RIFs. STX has debt due every year to be refinanced at higher rates too.
Generally, when debt becomes due, the company will simply issue new debt. I could easily see Seagate putting out a new debt issue at $800M to pay off the old debt and catch up on debt to suppliers. Granted, it will occur at a higher interest rate than the retired debt, but it would be still workable. It will reduce the flexibility to buy back stock, but I'm guessing that game is over anyways.