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Investing.com -- Shares in Seagate Technology PLC (NASDAQ:STX) surged more than 12% in after-hours trading after the prominent data storage company reported stronger than expected preliminary results for its fourth quarter revenues and gross margin on Monday evening.
For the company's fourth quarter of Fiscal Year 2016, Seagate Technology expects to finish with sales of $2.65 billion and non-GAAP gross margin of 25.8%, considerably above prior estimates of $2.3 billion and 23% respectively. The improved guidance comes amid stronger than expected demand for the company's enterprise HDD portfolio and better cost containment strategies, said Seagate Technology CEO Steve Luczo.
"The evolution of mobile and cloud data driven environments continues to define itself as requiring significant amounts of mass storage. HDD devices are where most data bits ultimately reside and our record HDD exabyte shipments in the June quarter, particularly due to enterprise demand, continue to support this thesis," Luczo said in a statement.
"We believe the long-term trend of exabyte storage demand growth exceeding HDD areal density growth remains intact for the foreseeable future. Seagate will continue to evolve its product offering, technology investment and manufacturing footprint to best serve our customers with the world’s most advanced and cost advantaged HDD products," Luczo added.
Also on Monday, Seagate Technology outlined a broad restructuring plan, which includes a proposal to reduce the company's global headcount by 6,500 employees or approximately 14% by the end of Fiscal Year 2017. The company plans on incurring $164 million in pre-tax charges next year through the initiative, Seagate Technology said in a statement.
Shares in Seagate Technology soared 2.96 or 12.29% to 27.05 in after-hours trading.