Seagate has already publicly acknowledged disappointing progress with the ramp of its helium drives, Kisner commented in his downgrade note. But while the company shipped only 300,000 10TB units in the June quarter the company guided its third quarter shipments to be one million units — a figure the analyst has a hard time believing (see Kisner's track record here).
In addition, the company's woes in the Helium drives segment is particularly concerning since over 40 percent of the company's gross profit comes from the segment.
Bottom line, the analyst's prior bullish stance was based on Seagate's success in helium drives among hyperscale customers, which was viewed as the "most interesting" growth opportunity, the analyst continued. But this thinking no longer applies and is replaced with multiple concerns.
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