Weak retail business in Europe hits Seagate revenue

Hard-drive maker Seagate Technology's revenue forecast for the current quarter fell well short of analyst estimates, largely due to weakness in Europe, sending the company's shares down almost 12 percent in early trading.

Seagate's retail business in Europe, which accounts for about 20 percent of the company's revenue, shrank about 5 percent in the December quarter.

The company, which gets about two-thirds of its revenue from original equipment manufacturers including PC makers, also reported weaker-than-expected revenue for the second quarter.

"We are tempered somewhat by the instability of European business environment as well as commodity and currency volatility throughout the world," Chief Executive Steve Luczo said on a conference call.

Seagate forecast third-quarter revenue of about $3.45 billion, well below analysts' average estimate of $3.59 billion.

Research firm IDC estimates that worldwide PC shipments fell 2.4 percent in last quarter of 2014 as consumers shift to smartphones and tablets. (http://bit.ly/1BWnAkz)

To help make up for a declining PC market, Seagate and rival Western Digital Corp are tapping into the growing demand for products that help store data in the cloud.

Net income attributable to Seagate rose to $933 million, or $2.78 per share, in the second quarter ended Jan. 2 from $428 million, or $1.24 per share, a year earlier.

Excluding items, company earned $1.35 per share. Revenue rose to $3.70 billion from $3.53 billion.

Analysts on average had expected earnings of $1.35 per share on revenue of $3.74 billion, according to Thomson Reuters I/B/E/S.

Seagate's shares were down 10.5 percent at $57.31 in mid-morning trading. Western Digital's shares were down 8 percent at $97.63.

Up to Friday's close, Seagate's shares had risen about 18 percent in the last year.