Seagate Technology Reports Fiscal First Quarter 2009 Results



    SCOTTS VALLEY, Calif., Oct. 22 /CNW/ -- Seagate Technology (Nasdaq:   STX)
today reported disk drive unit shipments of 48 million, revenue of $3.03
billion, net income of $60 million, and diluted net income per share of $0.12
for the quarter ended October 3, 2008. Net income and diluted net income per
share for the quarter includes $20 million of purchased intangibles
amortization and other charges associated with Seagate's acquisitions, and
charges related to restructuring activities of $51 million. The net impact of
these items is a $71 million reduction to net income and a decrease of
approximately $0.14 per share on a diluted basis. Of the $51 million related
to restructuring activities, approximately $28 million was accelerated
depreciation recorded in cost of revenue and $23 million was for severance and
other closing costs recorded in restructuring.
    "This quarter was marked by Seagate's measurable progress toward
regaining our longstanding product leadership position across all markets,"
said Bill Watkins, Seagate chief executive officer. "With a strong balance
sheet, Seagate is operating from a position of strength. Looking forward, in
the face of a challenging macro-economic environment, we will focus on cost
controls and inventory management while continuing to invest in the key
technologies that will solidify product leadership. As a result, we remain
highly confident in our ability to convert the long-term growth in demand for
storage into superior value for our shareholders."
    Additional information relating to the financial results for the first
fiscal quarter of 2009 can be found online at seagate.com.
    
    Business Outlook
    
    For the December quarter, Seagate expects to report revenue of $2.85 -
$3.05 billion, and diluted net income per share of $0.12 - $0.16. Included in
the December quarter outlook is the following:
    
    -- Approximately $20 million for purchased intangibles amortization and
       other charges associated with recent acquisitions
    -- Approximately $7 million for restructuring charges related to
       previously announced restructuring events
    -- Approximately $7 million for accelerated depreciation expenses related
       to the planned closing of the Pittsburgh research facility (R&D)
    
    The net impact of these items is an estimated reduction to net income of
approximately $34 million, and an aggregate decrease in diluted earnings per
share by approximately $0.07. The outlook does not include the impact of any
future mergers, acquisitions, dispositions or other business combinations,
stock repurchases or potential new restructuring activities the company may
undertake during the quarter.
    Current uncertainty in global economic conditions makes it particularly
difficult to predict product demand and other related matters and makes it
more likely that Seagate's actual results could differ materially from current
expectations.
    
    Dividend
    
    The company has declared a quarterly dividend of $0.12 per share to be
paid on or before November 21, 2008 to all common shareholders of record as of
November 7, 2008.
    
    Conference Call
    
    Seagate will hold a conference call to review the fiscal first quarter
results at 2:00 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: 64605834
    Replay
    
    A replay will be available beginning today at 6:00 p.m. Pacific Time
through October 29 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: 64605834
    About Seagate
    
    Seagate is the worldwide leader in the design, manufacture and marketing
of hard disk drives and storage solutions, 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, with the goal
of being the time-to-market leader 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, 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, uncertainties, and other factors that
could cause actual results to differ materially from those anticipated by
these forward-looking statements. Such risks, uncertainties, and other factors
may be beyond the company's control. In particular, uncertainty in global
economic conditions pose a risk to the overall economy as consumers and
businesses may defer purchases in response to tighter credit and negative
financial news. Such risks and uncertainties also include the impact of the
variable demand and the aggressive pricing environment for disk drives,
particularly in view of current business and economic conditions; dependence
on Seagate's ability to successfully qualify, manufacture and sell its disk
drive products in increasing volumes on a cost-effective basis and with
acceptable quality, particularly the new disk drive products with lower cost
structures; the impact of competitive product announcements and possible
excess industry supply with respect to particular disk drive products; our
ability to achieve projected cost savings in connection with our announced
restructuring plans; and market conditions and alternative cash imperatives
that could impact our ability to repurchase additional common shares pursuant
to Seagate's previously announced share repurchase program. Information
concerning risk, uncertainties and other 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 13, 2008, which statements are
incorporated into this press release by reference. 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)
    

    
                                                      October 3,      June 27,
                                                         2008         2008 (a)
    ASSETS
      Cash and cash equivalents                         $1,005           $990
      Short-term investments                               148            151
      Accounts receivable, net                           1,393          1,410
      Inventories                                          909            945
      Deferred income taxes                                272            274
      Other current assets                                 640            502
        Total Current Assets                             4,367          4,272
    

    
      Property, equipment and leasehold
       improvements, net                                 2,509          2,464
      Goodwill                                           2,349          2,352
      Other intangible assets                               94            111
      Deferred income taxes                                616            616
      Other assets, net                                    234            305
        Total Assets                                   $10,169        $10,120
    

    
    LIABILITIES AND SHAREHOLDERS' EQUITY
      Accounts payable                                  $1,930         $1,652
      Accrued employee compensation                        153            440
      Accrued expenses, other                              838            825
      Accrued income taxes                                   6             10
      Current portion of long-term debt                    660            360
        Total Current Liabilities                        3,587          3,287
      Accrued warranty                                     231            219
      Other non-current liabilities                        336            358
      Long-term debt, less current portion               1,370          1,670
        Total Liabilities                                5,524          5,534
    

    
      Shareholders' Equity                               4,645          4,586
        Total Liabilities and Shareholders' Equity     $10,169        $10,120
    

    
    (a) The information in this column was derived from the Company's audited
        consolidated balance sheet as of June 27, 2008.
    



    
                              SEAGATE TECHNOLOGY
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In millions, except per share data)
                                 (Unaudited)
    

    
                                                  For the Three Months Ended
                                                    October 3,  September 28,
                                                         2008           2007
    

    
    Revenue                                            $3,033         $3,285
    

    
    Cost of revenue                                     2,508          2,476
    Product development                                   260            242
    Marketing and administrative                          148            153
    Amortization of intangibles                            14             13
    Restructuring, net                                     23              5
      Total operating expenses                          2,953          2,889
    

    
    Income from operations                                 80            396
    

    
    Interest income                                         7             16
    Interest expense                                      (30)           (32)
    Other, net                                            (13)            (5)
      Other income (expense), net                         (36)           (21)
    

    
    Income before income taxes                             44            375
    Provision for (benefit from) income taxes             (16)            20
    Net income                                            $60           $355
    

    
    Net income per share:
      Basic                                             $0.12          $0.67
      Diluted                                            0.12           0.64
    

    
    Number of shares used in per share calculations:
      Basic                                               485            531
      Diluted                                             494            560
    



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

    
                                                  For the Three Months Ended
                                                     October 3, September 28,
                                                         2008           2007
    OPERATING ACTIVITIES
    Net income                                            $60           $355
    Adjustments to reconcile net income to net
     cash from operating activities:
      Depreciation and amortization                       253            205
      Stock-based compensation                             27             29
      Deferred income taxes                                 2              8
      Other non-cash operating activities, net            (13)             7
      Changes in operating assets and liabilities:
        Accounts receivable                                16           (133)
        Inventories                                        36             31
        Accounts payable                                  278            250
        Accrued expenses, employee compensation and
         warranty                                        (309)            (2)
        Other assets and liabilities                      (46)             4
          Net cash provided by operating activities       304            754
    

    
    INVESTING ACTIVITIES
    Acquisition of property, equipment and leasehold
     improvements                                        (280)          (150)
    Purchases of short-term investments                   (90)          (198)
    Maturities and sales of short-term investments         93            119
    Proceeds from sale of investment in equity securities  10              -
    Acquisitions, net of cash acquired                      -             (6)
    Other investing activities, net                         2             (3)
          Net cash used in investing activities          (265)          (238)
    

    
    FINANCING ACTIVITIES
    Proceeds from exercise of employee stock options
     and employee stock purchase plan                      35             62
    Dividends to shareholders                             (59)           (54)
    Repurchases of common shares                            -           (249)
          Net cash used in financing activities           (24)          (241)
    

    
            Increase in cash and cash equivalents          15            275
    Cash and cash equivalents at the beginning of
     the period                                           990            988
    Cash and cash equivalents at the end of the period $1,005         $1,263

    




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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