A：Seagate's key strength for the durability of hard drive technology is its deep expertise across mechanical engineering, material science, nanoscale fabrication, and advanced photonics. This expertise enables Seagate to deliver on the Hammer Roadmap and create a durable competitive advantage for hard drive technology.

A：Seagate's achievements in the previous year include a milestone year with respect to financial performance, operational execution, and technology leadership. They carried this momentum into the new calendar year supported by strong demand, resulting in new records for profitability metrics and strong revenue growth. Financial highlights include retiring $500 million in gross debt, generating over $600 million in free cash flow, and achieving a strong non GAAP gross margin and operating margin.

A：Seagate's December quarter financial results showed strong year-over-year revenue growth and new records for profitability metrics. Non GAAP gross margin expanded to 42.2%, up from 41% in the prior period. Non GAAP operating margin expanded as well, and non GAAP operating profit grew by 29% to $100 million. Net income grew to $700 million with non GAAP EPS of $7 dollars and 11 cents per share.

A：The projected growth for the broader B market is expected to come from various segments, with the largest growth contribution coming from AI nearline projects, which are included in Seagate's data center market segment.

A：Seagate's March quarter outlook indicates a strong demand environment, particularly among global cloud customers. Data center demand is expected to more than offset typical March quarter seasonality. Edge IoT market revenue is projected to be in a range of $2.9 billion plus, representing a year-over-year improvement. Non GAAP operating expenses are expected to be approximately $220 million, and non GAAP operating margin is anticipated to approach the mid-40% range. Non GAAP EPS is expected to be $7 dollars and 11 cents plus or minus 11 cents.

A：The incremental gross margins are expected to remain flat to slightly up as the company renegotiates prices with customers for the new drives. The company values the proposition of new drives that can store ed terabytes at a time, which is very strong. As for overall average pricing per exabyte, the company has seen a decrease from down double digits to high single digits and has exited the quarter down year over year. There is a possibility of flat or even positive year-over-year pricing.

A：The current and future pricing strategy is being influenced by the strong demand being observed. As the company rolls through into the post-summer season and assesses the capacity being brought online due to aggressive product transitions, it expects to have more exabytes available to renegotiate with customers, leading to potential flat to slightly up pricing.

A：The company is executing well with gross margins, achieving better results than initially discussed at the investor day, with an incremental margin of over $2.6 billion of revenue. The company aims to continue optimizing production, sales, and financial profitability over the next two to three years.

A：The company expects demand for its products to remain strong, with customers planning ahead better due to an increase in persistence in the market. The industry's supply of exabytes has risen quite a bit, but demand is still strong, leading to good discussions with customers for the next year.

A：The company projects that revenue and profitability will continue to improve sequentially every quarter for the rest of the calendar year, indicating an upward trend that is not changing and is possibly getting better.

A：The company plans to transition aggressively to Exabyte growth, but the pace will be constrained by the tight manufacturing process and existing commitments to customers. The ramp-up to higher Exabyte growth will be manageable and profitable, as the company operates manufacturing at a tight capacity. The company is optimistic about the port terabyte platter's success in the market.

A：The potential for cost reductions and improved profitability is a focus as the company ramps Hammer with the Mosaic force. However, specific details on achieving those targets for the Hammer rollout and the blended cost reductions are not provided in the transcript. For further insight, one would need to refer to additional materials or communications from the company.

A：The new product line is expected to have a favorable impact on costs, especially as the volume of Ly terabyte drives increases. This is anticipated to lead to a significant reduction in cost per terabyte compared to the current sum and contribute to further increases in gross margin.

A：The pricing strategy for new LTA products is dynamic, adjusting based on the demand observed in the market and the available supply. As such, new LTA products may be priced at a higher value, reflecting the growing gap between enterprise hard drives and solid-state drives. The company actively manages the mix of products and pricing to optimize results.

A：The company is guiding for mid-teens growth in exabyte shipments for nearline storage in the future, which is in line with their financial model. While they have performed better in recent quarters, they do not provide specific guidance on a calendar-to-calendar basis.

A：The expected margin expansion in the March quarter is attributed to the qualification of another customer on Hammer, which will allow for an increase in volume. However, the fundamental change is not different from what the company has done before; it is still based on pricing strategy and product mix.

A：The margin expansion in the March quarter is not significantly due to the systems business, which is doing well but on a relatively small scale. The primary driver for the margin expansion is the core HDD business.

A：There is an expectation that there could be more significant price increases in the future, particularly as the company reprices existing long-term agreements when they roll off. Currently, average prices are flat, but there is a potential for change as existing agreements are repriced.

A：The updated trajectory for the HAMR mix indicates a shift towards a higher proportion of Ed terabyte per platter products, as development and qualification of this product are being prioritized due to constrained factory capacity. This shift will positively affect the product availability and overall mix.

A：The pricing strategy for the company's products is influenced by the demand for new products, with constrained supply creating an environment where pricing can be dictated. While the speaker initially anticipated flat to slightly up pricing, the actual outcome depends on future demand. The strong demand has allowed the company to have better visibility into future data center procurement and to run factories more efficiently.

A：The increase in gross margins is attributed to a shift in product mix towards higher capacity and better products, driven by high demand. There has been no change in manufacturing strategy or offshoring manufacturing, but the demand for these products has significantly benefited the company. The combination of a favorable product mix and strong demand has contributed to the overall gross margin improvement.

A：The company does not provide specific details on the impact of pricing, mix, and cost, but acknowledges that changes in product mix have helped with cost reduction and that the supply and demand situation supports their pricing strategy. These factors are all contributing positively to the increasing gross margins, which are expected to continue through the calendar year.

A：The company manages lead times and product transitions by being predictable and planning for the next year based on what they can deliver within the next six months. They base their wafer deployments on customer needs and their ability to deliver predictably while deploying engineered resources for product transitions. This approach helps maintain product mix and manage expectations.

A：The company's product roadmap and timeline for transitions are progressing well and are mostly under the company's control. However, some factors are also influenced by customers, particularly their need for more exabytes and their behavioral changes which aid in aligning the roadmap and supply with the south of factories.

A：The company is very positive about the Ed terabytes per disk in terms of its impact on cost reduction. As they add more content per unit, it aids in reducing costs and improving profitability. They are qualifying this new product to major customers, and the full impact of cost reduction is expected to be stronger through the end of the calendar year and continue into the following year.

A：The company plans a significant transition towards higher capacities and the Ed terabytes per platter. They acknowledge that making these transitions adds complexity, but the speed of the ramp and ability to optimize throughout the supply chain are critical. They remain focused on these efforts to provide a stable future for the product line.

A：For 2027, the company indicates that neither pricing nor exabyte commitments are locked in, suggesting a more flexible approach to these variables compared to the previous years where both were allocated through 2026. However, it is not clear from the transcript what specific agreement the company refers to for 2027, as the transcript does not provide further details.

A：For the upcoming calendar year, a Production Order (PO) is in place for all quarters with volume and pricing well-defined. The majority of the volume is already allocated for calendar year 2027 and work will start soon. However, prices for some products have not yet been fixed.

A：The progress with the longest lead time parts is pending as the speaker indicates that they have not yet started but will soon for the start of a new product line. Discussions with customers about the plan and what calls to prioritize are needed, as customers also require predictability.

A：Depreciation should be modeled based on the CapEx, as CapEx is aligned with a target script-to-script of revenue. The company is at the bottom of that range and is not increasing in line with the revenue target or expectations. Despite several quarters of increased CapEx, depreciation should not be expected to step up significantly as the company's model is consistent with previous communication.

A：There are certain applications that are very memory-dependent and attached to compute. The speaker notes that the tiering architecture in data centers is fairly well set and won't change based on economics or architectures that are well understood. The speaker cautions against a simplistic view of hard drives as merely storing data in the background, as they are actually used for performance-intensive workloads and not just as memory-caching devices. The speaker suggests that there are applications across the entire spectrum, and while there may be some shift towards NAND in a generative AI world, the architectural tier that stores data is likely to remain constant for the next decade.

A：The ramp-up of Hammer in the March quarter is expected to drive a better gross margin profile. As Hammer starts to ramp, gross margins are anticipated to improve. The focus on transitioning to Hammer and the expectation of strong demand for 4 terabyte per platter products are reasons for the expected improvement in revenue and profitability throughout the remainder of the calendar year.

A：As the company's top line ramps up with design wins and increased revenue, operating expenses (Opex) are expected to go down as a percent of mix. The company is close to achieving its fourth target of being 10% of revenue for Opex and will likely reach that in the last quarter. With continued cost control and expected revenue growth, Opex is expected to perform better.