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Seagate Q3 earnings dive

Santa Cruz Sentinel

SCOTTS VALLEY — A high profile announcement Tuesday that Seagate Technology
agreed to a $1.375 billion technology, licensing and product development deal with Samsung Electronics outshined a more mundane report that the disk drive maker’s third quarter earnings took a steep dive and the outlook for the June quarter is flat.

The company reported net income of $93 million, an 82 percent drop from a year ago. Revenue was $2.7 billion, a 12 percent drop from a year ago. Earnings per share were 21 cents, compared to $1 in the same period last year.

Seagate did not experience a negative impact materially from the Japan earthquake and tsunami in March, but the company said the events have created a volatile market situation, which have resulted in ongoing component shortages, power issues and transportation issues that are affecting the PC supply chain.

The supply situation is going to remain constrained through the June quarter, said Steve Luczo, Seagate chief executive officer and president. The outlook is for flat or decreased sales in the June quarter.

“I just think, in terms of what might happen during the quarter, it’s very fluid right now,” Luczo said. “The supply situation is constrained and therefore the ability to drive inventory levels to what might be considered more normal levels would probably be difficult.”

Earlier this month, Seagate reinstated its dividend program with a quarterly cash dividend of 18 cents per share. It was, according to company executives, “an important milestone” reflecting current economic and corporate faith in a sustainable strength in the balance sheet.

The company spent about $405 million to repurchase 29.5 million shares during the March quarter. About $1.6 billion remain in the share repurchase program.

The goal of our capital structure strategy is unchanged: to maximize shareholder returns, while maintaining the flexibility to invest in a broad range of storage technologies to serve our customers.

Although the company’s worldwide head-count remained steady at about 53,000,
in Scotts Valley, where the company has maintained its administrative headquarters for years, the head-count shrunk from about 800 employees to about 650. Seagate announced last year that it was migrating its administrative offices to Cupertino.

Seagate Technology

WHAT: Designs, manufactures and markets hard disk drives for electronic information storing in desktop and laptop computers, consumer electronics and data centers.

HEADQUARTERS: Arthur Cox Building, Earlsfort Terrace, Dublin 2, Ireland.

HISTORY: Founded in 1979 as maker of the first 5.25-inch hard disk drive.

EMPLOYEES: The company employs about 53,000 worldwide, about 650 of whom work in the Scotts Valley administrative offices.

LEADERSHIP: Steve Luczo, chief executive officer, president and board chairman.

STOCK: Seagate shares trading on the Nasdaq as STX were up 9 cents on Tuesday
to close at $17.93. In the past year, shares have traded between $9.84 and
$20.90.

FINANCIALS: Third fiscal quarter net income was $93 million, or 21 cents diluted earnings per share, on revenue of $2.695 billion compared to $518 million, or $1 diluted earnings per share, on revenue of $3.05 billion a year ago in the same quarter. The company reported cash and cash equivalents of about $2.2 billion and short-term investments of about $279 billion.

GUIDANCE: Excluding any impact from a pending merger with Samsung, Seagate forecast June quarter revenues of about $2.7 billion with diluted earnings per share of 19-23 cents.
This article appeared here.

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This entry was posted on April 19, 2011 by in Business, Daily News, Technology.

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