Seagate is tanking after cutting its sales forecast

Seagate shares plummeted by as much as 18% on Thursday after the company cut its forecast for fiscal-third-quarter revenues.

In a filing Wednesday, the data-storage company said it expects to report revenues of about $2.6 billion, down from the $2.7 billion estimate it gave earlier.

Seagate explained the forecast cut:

The difference in the Company’s revenue and non-GAAP gross margin from its forecast was driven primarily by reduced demand for traditional mission critical HDD enterprise products, reduced demand for the company’s systems and silicon products, reduced demand for desktop client products primarily in China, and the Company’s decision to not aggressively participate in the low capacity notebook market.

Evidently, the recurring theme is “reduced demand.”

Seagate CEO Steve Luczo said in the statement that amid the broader consumer shift away from personal hard drives, the company expects to benefit from cloud-based storage. It is also counting on continued patronage from customers who need hard drives with tons of storage — as much as 8 TB.

Seagate anticipates it would ship about 39 million hard disk drives in the third quarter, representing 40% of market share.

It expects non-GAAP gross margin at 23%, down from its earlier projection of 25.6%.

Seagate shares have lost half their value over the past year. The drop on Thursday was the worst in seven years.

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