STX
#I think <UNK> gave most of the pieces of it and what we're thinking for revenue.
We're not going to stay in the business of a calendar projection.
We did that when people thought we were going out of business three months ago.
But because we did say we'd give an update, I think the missing piece to do the model you want to do is where do we think revenues are going to come in.
Right now I would say that we feel that there's going to be revenue growth year over year and it's probably going to be in the mid single digits, maybe mid to high single digits.
That would imply, as you point out, beating that number by 40% to 50% with some head room.
So if you landed in the $3.75 to $4 range I think that's probably right, given what we can see today.
But I think the good news is margins near the midpoint of the range, operating margins probably a year ahead of where we thought we were going to be, and revenue growth, which I think we're feeling more confident that on a year-over-year basis we're going to see the revenue growth as well.
Thank you.
Are we at capacity.
As you know, in our business you only need to be at capacity on one element and you're technically at capacity.
So yes, we're pretty much at capacity.
But you got to remember, we're at capacity with a portfolio that's just rolling into a lot of new products.
So the yield improvement potential is fairly significant.
And then how we use that yield improvement in terms of where we use those extra heads and just gets very interesting as well.
So where does the biggest marginal contribution occur as we free up capacity, whether or not it's head related or disc related or test related.
So yes, we're at capacity, but it's ---+ this is an extremely dynamic business that as you improve yield, you get more capacity, but as you get more capacity you may then decide to use that in more drives that have more heads and discs.
So we're running the business the way we want to.
Let me skip to your third question because they're related, as you pointed out.
What that means is that when we scope a business to, quote, do 40 million units per quarter, then what we go do is we task the ops team to go figure out how in the same footprint and same capital budget how to get to 50 million.
So it doesn't necessarily imply more capital per se.
I think more capital would only be a function of was there some significant market opportunity; whether or not that was a spike in demand or a product opportunity from a technical leadership, which would then obviously be reflected in greater revenue growth or expanding gross margin.
So we don't see any big change in where we run our business, and as you probably can tell we've been really lean on capital and we'll continue to do so, even though we've had some fairly significant one-time capital events like what we're doing in our factories to prepare for the consolidation that we identified.
Exabyte growth, again, I think it's just really important for everyone, whether or not it's an analyst or an investor, to understand that the exabyte growth feels like it's going to continue in this 20% to 35% range on an annual basis, but that doesn't mean every year quarter over quarter it's going to go up 20%.
That's what we've witnessed and that's ---+ as I said before, it's going to be like this until we get more diversification of the cloud service providers or as corporations start to deploy cloud like architectures that are using these super high capacity drives.
Whether or not you ask me for the next year or two years or 24 months or 18 months, my answer's kind of the same.
It feels to us that the demand is going to continue for utilizing HDDs in the very highest capacity environments, and those are ---+ that's a great trend for us because it's absorbing more heads and discs.
It's a way more complicated channel.
It's a way more complicated test, manufacturing tolerances are much more difficult and all of that translates into a product that has a lot higher value add.
So we don't see any shift to that fundamental thesis.
Thanks.
This will be our last one, operator, so we can end before the market opens.
I guess I don't want to necessarily say that right at this second.
Again, there's no reason getting wildly speculative about being at the upper end of the range.
There's a lot of issues that go into that.
I'm not sure we've disclosed when the Korat facility is going to be fully operational, and I'm not sure we want to from a competitive perspective.
So sometime in the next six months we're rolling into that facility.
Okay.
All right.
Great.
So we're going to end the call here.
Just want to thank everybody, certainly all the employees at Seagate, our suppliers, our customers, our investors and then we look forward to talking to everybody on the next quarter call.
Thanks very much.
