Seagate misses expectations but reports record fourth quarter

Santa Cruz Sentinel

SCOTTS VALLEY — Despite continued global economic volatility and stiff pricing competition in the digital storage industry, Seagate Technology reported Tuesday its strongest June quarter ever.

“Global demand for storage remained strong throughout the year reflecting the pace at which digital content and data is being created,” said Steve Luczo, chief executive officer, president and company chairman.

However, demand slowed in the June quarter.

“The biggest issue that we faced in the quarter was that the broader macroeconomic conditions deteriorated during the quarter, particularly in Europe,” Luczo said.

On a conference call Tuesday with investors, Luczo said that while most drive makers slowed production, not everyone in the industry did. “The lower unit shipments and unfavorable pricing at some key capacity points impacted Seagate’s ability to deliver revenue and earnings for the quarter within our target range,” he said.

The company shipped 46.8 million disk drive units during the quarter and a record 193.2 million disk drives in the fiscal year ending July 2.

Seagate reported fourth fiscal quarter net income of $379 million, or 76 cents diluted earnings per share, on revenue of $2.66 billion. Fiscal year revenue was $11.4 billion, net income of $1.61 billion and diluted earnings per share of $3.14.

Luczo said he was encouraged by the company’s performance, but would provide only a conservative outlook. It was best, he said, to remain prudent.

“The company responded well to the increase in global hard drive demand, which grew 22 percent year-over-year, introduced key new products, continued to strengthen the capital structure and remained focused on improving key business fundamentals to position Seagate for future growth,” Luczo said.

Last month, the company announced plans to move most of its Scotts Valley head administrative offices to Cupertino as part of a consolidation effort involving two other Silicon Valley offices.

It is not clear yet what the company plans to do with its property. Of about 730 employees currently in Scotts Valley, about 160 employees in the IT and Motor divisions will stay in Scotts Valley.

Seagate Technology

WHAT: Designs, manufactures and markets hard disk drives for electronic information storage in desktop and laptop computers, consumer electronics and data centers.
ADMINISTRATIVE HEADQUARTERS: 920 Disc Drive, Scotts Valley. Incorporated in Ireland.
HISTORY: Founded in 1979 as maker of the first 5.25-inch hard disk drive.
EMPLOYEES: The company employs about 52,000 worldwide, about 600 of whom work in the Scotts Valley headquarters. The company is moving its administrative U.S. headquarters to Cupertino.
LEADERSHIP: Steve Luczo, chief executive officer, president and board chairman
STOCK: Seagate shares trading on the Nasdaq as STX were up
26 cents on Tuesday to close at $14.53. In the last year, shares have traded between $10.72 and $21.58.
FINANCIALS: Fourth quarter net income was $379 million, or 76 cents diluted earnings per share, on revenue of $2.66 billion compared to a loss of $83 million, or a loss of 17 cents diluted earnings per share, on revenue of $2.353 million a year ago in the same quarter. For fiscal year 2010, net income was $1.61 billion, or $3.14 diluted earnings per share on revenue of $11.4 billion, compared to net loss in fiscal 2009 of $3.16 billion, or a loss of $6.40 per diluted share on revenue of $9.81 billion a year ago.
GUIDANCE: The company forecast revenues for the September quarter would be in the range of $2.7 billion to $2.9 billion.

This article first appeared here.

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