Seagate Technology Reports Fiscal First Quarter 2008 Results



    
    - Quarterly revenue grows 18% year-over-year

    - Ships 47 million units for the quarter, up 21% year-over-year
    

    SCOTTS VALLEY, Calif., Oct. 16 /CNW/ -- Seagate Technology (NYSE:   STX)
today reported disc drive unit shipments of 47 million, revenue of $3.3
billion, GAAP net income of $355 million, and diluted net income per share of
$0.64 for the quarter ended September 28, 2007. GAAP net income and diluted
net income per share includes approximately $30 million of purchased
intangibles amortization and other charges associated with the Maxtor and
EVault acquisitions. Excluding these charges, non-GAAP net income and diluted
net income per share were $385 million and $0.69. Included in both GAAP and
non-GAAP results are restructuring charges of approximately $5 million or
approximately $0.01 per share.
    "Our strong performance in the quarter reflects favorable industry
conditions as well as the competitive strength of Seagate's unique platform
and commitment to innovation," said Bill Watkins, Seagate chief executive
officer. "The first fiscal quarter has historically been a strong one for
Seagate, and this year, we benefited from unit demand greater than expected.
We believe we are well positioned to continue driving year-over-year revenue
growth, and these record quarterly results demonstrate the effectiveness of
Seagate's business model."
    Adjustments made to GAAP net income and diluted net income per share can
be found with the financial statements included with this press release.
Additional information relating to the financial results for the first fiscal
quarter of 2008 can be found online at seagate.com.
    
    Business Outlook
    
    For the December quarter, Seagate expects to report revenue of $3.4 -
$3.5 billion, and GAAP diluted net income per share of $0.66 - $0.70.
Excluding approximately $26 million of purchased intangibles amortization and
other charges associated with the Maxtor and EVault acquisitions, non-GAAP
diluted net income per share for the December quarter is expected to fall
within the range of $0.71 - $0.75.
    This guidance does not include the impact of any future acquisitions,
stock repurchases or restructuring activities the company may undertake.
    
    Dividend and Stock Repurchase
    
    The company has declared a quarterly dividend of $0.10 per share to be
paid on or before November 16, 2007 to all common shareholders of record as of
November 2, 2007.
    During the quarter ended September 28, 2007, the company took delivery of
approximately 10.3 million of its common shares related to its share
repurchase plan. The average price of the shares delivered to the company in
the June quarter was $24.27. The company has authorization to purchase
approximately $725 million of additional shares under the current stock
repurchase program.
    
    Conference Call
    
    Seagate will hold a conference call to review the fiscal first quarter
results at 2:30 p.m. Pacific Time today. The conference call can be accessed
online at seagate.com or by phone as follows:

    
    USA: (877) 223-6202
    International: (706) 679-3742
    Conference ID: 19682090
    Replay
    
    A replay will be available beginning today at 6:30 p.m. Pacific Time
through October 23 at 8:59 p.m. Pacific Time. The replay can be accessed from
seagate.com or by phone as follows:

    
    USA: (800) 642-1687
    International: (706) 645-9291
    Conference ID: 19682090
    Podcast
    
    A podcast featuring Brian Dexheimer discussing Seagate's performance
during the quarter and the outlook going forward can be heard and downloaded
from http://www.podtech.net/seagate  beginning at 2:30 p.m. Pacific Time.
    
    About Seagate
    
    Seagate is the worldwide leader in the design, manufacture and marketing
of hard disc drives, providing products for a wide-range of applications,
including Enterprise, Desktop, Mobile Computing, Consumer Electronics and
Branded Solutions. Seagate's business model leverages technology leadership
and world-class manufacturing to deliver industry-leading innovation and
quality to its global customers, and to be the low cost producer in all
markets in which it participates. The company is committed to providing
award-winning products, customer support and reliability to meet the world's
growing demand for information storage. Seagate can be found around the globe
and at http://www.seagate.com.
    
    Cautionary Note Regarding Forward-Looking Statements
    
    This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. These forward-looking
statements include, but are not limited to, statements related to the
company's future operating and financial performance, including expected
revenue, net income and diluted earnings per share (presented on a GAAP basis
as well as on a non-GAAP adjusted basis), price and product competition,
customer demand for our products, and general market conditions. These
forward-looking statements are based on information available to Seagate as of
the date of this press release. Current expectations, forecasts and
assumptions involve a number of risks and uncertainties that could cause
actual results to differ materially from those anticipated by these
forward-looking statements. Such risks and uncertainties include a variety of
factors, some of which are beyond the company's control. In particular, such
risks and uncertainties include the impact of the variable demand and the
aggressive pricing environment for disc drives; dependence on Seagate's
ability to successfully qualify, manufacture and sell its disc drive products
in increasing volumes on a cost-effective basis and with acceptable quality,
particularly the new disc drive products with lower cost structures; and the
impact of competitive product announcements and possible excess industry
supply with respect to particular disc drive products, particularly now that
there are no material limitations on disc drive component supply for our
competitors. Information concerning additional factors that could cause
results to differ materially from those projected in the forward-looking
statements is contained in the company's Annual Report on Form 10-K as filed
with the U.S. Securities and Exchange Commission on August 27, 2007. These
forward-looking statements should not be relied upon as representing the
company's views as of any subsequent date and Seagate undertakes no obligation
to update forward-looking statements to reflect events or circumstances after
the date they were made.



    
                              SEAGATE TECHNOLOGY
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In millions)
                                 (Unaudited)
                                                   September 28,     June 29,
                                                       2007          2007 (a)
    ASSETS
     Cash and cash equivalents                       $1,263           $988
     Short-term investments                             235            156
     Accounts receivable, net                         1,519          1,383
     Inventories                                        763            794
     Deferred income taxes                              215            196
     Other current assets                               354            284
       Total Current Assets                           4,349          3,801
     Property, equipment and leasehold
      improvements, net                               2,246          2,278
     Goodwill                                         2,327          2,300
     Other intangible assets                            169            188
     Deferred income taxes                              678            574
     Other assets, net                                  296            331
       Total Assets                                 $10,065         $9,472
    LIABILITIES AND SHAREHOLDERS' EQUITY
     Accounts payable                                $1,551         $1,301
     Accrued employee compensation                      232            157
     Accrued expenses, other                            739            786
     Accrued income taxes                                11             75
     Current portion of long-term debt                  330            330
       Total Current Liabilities                      2,863          2,649
     Other non-current liabilities                      363            353
     Long-term accrued income taxes                     225              -
     Long-term debt, less current portion             1,734          1,733
       Total Liabilities                              5,185          4,735
    

    
     Shareholders' Equity                             4,880          4,737
        Total Liabilities and Shareholders' Equity  $10,065         $9,472
    


    
    (a) The information in this column was derived from the Company's audited
        consolidated balance sheet as of June 29, 2007.
    



    
                              SEAGATE TECHNOLOGY
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In millions, except per share data)
                                 (Unaudited)
                                                   For the Three Months Ended
                                                   September 28, September 29,
                                                       2007          2006
    

    
    Revenue                                           $3,285        $2,793
    Cost of revenue                                    2,476         2,351
    Product development                                  242           243
    Marketing and administrative                         153           180
    Amortization of intangibles                           13            11
    Restructuring, net                                     5            (4)
      Total operating expenses                         2,889         2,781
    Income from operations                               396            12
    

    
    Interest income                                       16            19
    Interest expense                                     (32)          (20)
    Other, net                                            (5)            3
      Other income (expense), net                        (21)            2
    Income before income taxes                           375            14
    Provision for (benefit from) income taxes             20            (5)
    Net income                                          $355           $19
    Net income per share:
      Basic                                            $0.67         $0.03
      Diluted                                           0.64          0.03
    Number of shares used in per share calculations:
      Basic                                              531           576
      Diluted                                            560           602
    



    
                              SEAGATE TECHNOLOGY
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In millions)
                                 (Unaudited)
    

    
                                                   For the Three Months Ended
                                                   September 28, September 29,
                                                       2007          2006
    OPERATING ACTIVITIES
    Net income                                         $355          $19
    Adjustments to reconcile net income
     to net cash from operating activities:
      Depreciation and amortization                     205          199
      Stock-based compensation                           29           38
      Allowance for doubtful accounts receivable         (3)          40
      Other non-cash operating activities, net           18           (4)
      Changes in operating assets and liabilities:
        Current assets and liabilities                  144         (459)
        Other assets and liabilities                      6          (14)
          Net cash provided by (used in) operating
           activities                                   754         (181)
    INVESTING ACTIVITIES
    Acquisition of property, equipment and
     leasehold improvements                            (150)        (227)
    Purchases of short-term investments                (198)        (305)
    Maturities and sales of short-term
     investments                                        119          335
    Acquisitions, net of cash acquired                   (6)           -
    Other investing activities, net                      (3)          (6)
          Net cash used in investing activities        (238)        (203)
    FINANCING ACTIVITIES
    Net proceeds from issuance of long-term debt          -        1,477
    Proceeds from exercise of employee stock
     options and employee stock purchase plan            62           49
    Dividends to shareholders                           (54)         (46)
    Repurchases of common stock                        (249)        (150)
          Net cash (used in) provided by financing
           activities                                  (241)       1,330
    

    
          Increase in cash and cash equivalents         275          946
    Cash and cash equivalents at the beginning
     of the period                                      988          910
    Cash and cash equivalents at the end of
     the period                                      $1,263       $1,856
    Use of non-GAAP financial information
    
    Our results of operations have undergone significant change in the past
year, most significantly in connection with our acquisition of Maxtor. To help
the readers of our condensed consolidated financial statements prepared on a
GAAP basis better understand our past financial performance and our
expectations of our future results, we supplementally disclose, after making
certain non-GAAP adjustments, non-GAAP net income and non-GAAP diluted net
income per share. We also provide forecasts of these non-GAAP financial
measures. A reconciliation of the adjustments to GAAP net income and diluted
net income per share for the quarter is presented in the tables below. In
addition, an explanation of the ways in which our board of directors and
management use these non-GAAP financial measures to evaluate the business, the
substance behind our management's decision to use these non-GAAP financial
measures, the material limitations associated with the use of these non-GAAP
financial measures, the manner in which Seagate management compensates for
those limitations, and the substantive reasons why we believe that these
non-GAAP financial measures provide useful information to investors is
included under the caption "Use of Non-GAAP Financial Measures" in the Form
8-K furnished today with the U.S. Securities and Exchange Commission. This
additional non-GAAP financial information is not meant to be considered in
isolation or as a substitute for net income or diluted net income per share
prepared in accordance with GAAP. You should not compare our non-GAAP net
income or non-GAAP diluted net income per share results with those of other
companies, as the adjustments made to our GAAP results are unique to Seagate.



    
                              SEAGATE TECHNOLOGY
       ADJUSTMENTS TO GAAP NET INCOME AND DILUTED NET INCOME PER SHARE
                   (In millions, except per share amounts)
                                 (Unaudited)
    

    
                                                  Three Months Ended
                                                  September 28, 2007
    

    
    GAAP net income                                     $355
    Non-GAAP adjustments:
      Acquisition related adjustments:
      - Amortization of purchased
        intangible assets                        A        24
      - Stock-based compensation                 B         6
      Adjustments for taxes                      C         -
    Non-GAAP net income                                  385
    

    
    Diluted net income per share:
      GAAP                                            $ 0.64
    

    Non-GAAP                                        $ 0.69

    
    Shares used in diluted net income
     per share calculation:                              560
    



    
    A  For the three months ended September 28, 2007, amortization of
       purchased intangible assets acquired in acquisitions was allocated
       as follows:
                                                  Three Months Ended
                                                  September 28, 2007
    

    
    Cost of revenue                                      $11
    Amortization of intangibles                           13
    

    
      Total amortization of purchased intangible
       assets                                            $24
    



    
    B  For the three months ended September 28, 2007, stock-based
       compensation related to the acquisition of Maxtor was allocated as
       follows:
                                                  Three Months Ended
                                                  September 28, 2007
    

    
    Cost of revenue                                       $1
    Product development                                    3
    Marketing and administrative                           2
    

    Total stock-based compensation expense              $6


    
    C  To exclude the tax effects, where applicable, of adjustments to
       GAAP net income
    




For further information:

For further information: media relations, Brian Ziel, +1-831-439-5429, 
brian.ziel@seagate.com, or investor relations, Rod Cooper, +1-831-439-2371, 
rod.j.cooper@seagate.com, both of Seagate Technology Web Site:
http://www.seagate.com

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