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Seagate Technology Reports Fiscal Second Quarter 2006 Results

  • 19 January, 2006 12:43

<p>- Quarterly revenue soars 25% to record $2.3 billion, net income grows 100% to $287 million and shipments reach record 28.8 million units</p>
<p>- Company raises fiscal 2006 earnings outlook</p>
<p>Seagate Technology (NYSE: STX) today reported record quarterly revenue of $2.3 billion, net income of $287 million, and diluted earnings per share of $0.57 for the quarter ended December 30, 2005. Included in these results are expenses of $20 million for non-cash stock based compensation and a $6 million one-time charge associated with a licensing arrangement Seagate entered into during the quarter. These results compare to revenue of $1.85 billion, net income of $144 million and diluted earnings per share of $0.29 in the year-ago quarter. The year-ago results did not reflect costs associated with non-cash stock based compensation.</p>
<p>“Seagate’s outstanding performance reflects the company’s unique and consistent ability to successfully capitalize on the accelerating demand for digital content being consumed at home, at work and on the go,” said Bill Watkins, Seagate president and chief executive officer. “Our broad product line coupled with our technology, product and cost leadership continues to deliver key advantages across the expanding markets for disc drives, fueling significant unit and revenue growth.</p>
<p>“Over the last 12 months, the industry shipped 380 million disc drives totaling a massive 35 million terabytes of storage – an increase of 60% from 2004. This underscores the enormous proliferation of digital content and the need for mass storage in the growing number of consumer electronics devices as well as across the computing landscape. As more and more content providers unlock digital content for users, Seagate will play an enabling role in this trend. We’re pleased to deliver another great quarter and look forward to continued strong operating results in the second half of the fiscal year.”</p>
<p>Consumer Electronics Products</p>
<p>In the December quarter, Seagate shipped 3.5 million drives into consumer electronics (CE) applications, with 2.4 million of those units going into DVR applications, an increase of 93% from the year-ago quarter. With the transition in the gaming market now complete, Seagate expects significant growth in the gaming portion of the CE market in the March quarter.</p>
<p>Mobile Computing Products</p>
<p>Of the 3.2 million 2.5-inch disc drives Seagate shipped during the quarter, a record 2.9 million disc drives went into mobile computing applications, representing an increase of 136% from the year-ago quarter and 20% sequentially. Demand for Seagate’s Momentus family disc drives remained very strong and drove the 6th consecutive quarter of share growth in this space. Seagate’s industry-leading 160GB 2.5-inch disc drive utilizing perpendicular technology began shipments and qualifications during the December quarter. As a result of the company’s product leadership, Seagate’s market share in mobile drives of greater than 80GB is approximately 21%, as compared to 14% in the overall mobile computing market.</p>
<p>Enterprise Products</p>
<p>Seagate extended its leadership in the enterprise space during the quarter, shipping 3.5 million enterprise drives, an increase of 6% from the year-ago quarter and 16% sequentially. The total available market (TAM) was higher than expected as demand accelerated through the back half of the quarter. Seagate introduced its first nearline storage products during the quarter, beginning qualifications and shipments of NL35, its nearline-ready, enterprise disc drive for tiered storage environments.</p>
<p>Desktop Products</p>
<p>Seagate continued its leadership in the desktop storage space during the quarter, shipping a record 18.9 million desktop drives, an increase of 16% from the year-ago quarter and 8% sequentially. Shipments of Seagate’s industry-leading 160GB per platter disc drive increased to 1.6 million units during the quarter, and the drive was qualified at 5 OEMs. Channel sales for Seagate desktop products remained healthy throughout the quarter and Seagate exited the quarter with under four weeks of distribution channel inventory.</p>
<p>Pricing</p>
<p>The average selling price for all Seagate products, on a blended basis, increased approximately $2.00 over the September quarter. Price decreases on a “like for like” product basis during the December quarter were in line with the company’s expectations at the beginning of the quarter. Seagate offset these price decreases with increased unit volume and improved product mix.</p>
<p>Business Outlook</p>
<p>For the March quarter, Seagate expects to report revenue of approximately $2.25 billion, and diluted earnings per share of approximately $0.55, excluding expenses associated with non-cash stock based compensation. Non-cash stock based compensation is expected to be approximately $21 million or $0.04 per share, equating to GAAP earnings per share of approximately $0.51.</p>
<p>For fiscal year 2006, Seagate now expects to report earnings per share in the range of $2.20 - $2.25, excluding charges for non-cash stock based compensation. Charges for non-cash stock based compensation are expected to be approximately $0.16 per share, which equates to GAAP diluted earnings per share in the range of $2.04 - $2.09. This compares to Seagate’s previously stated fiscal year guidance of approximately $2.00 per share or approximately $1.84 per share when including charges for non-cash stock based compensation. The annual outlook incorporates a 5% tax rate during the March and June quarters.</p>
<p>Dividend</p>
<p>The company has declared a quarterly cash distribution of $0.08 per share to be paid on or before February 17, 2006 to all common shareholders of record as of February 3, 2006.</p>
<p>The full financial release and tables can be downloaded from: http://www.seagate.com/cda/newsinfo/newsroom/releases/article/0,1121,2953,00.html</p>
<p>Conference Call Replay
Seagate will hold a conference call to review the fiscal second quarter results. A replay will be available beginning January 18 at 5 p.m. Pacific Time through January 25 at 8:59 p.m. Pacific Time. The replay can be accessed from www.seagate.com/newsinfo/invest or by phone as follows:</p>
<p>USA: (800) 642-1687</p>
<p>International: (706) 645-9291</p>
<p>Access Code: 4075738</p>
<p>For more information please visit: http://www.seagate.com/newsinfo/invest/financial_info</p>
<p>About Seagate</p>
<p>Seagate is the worldwide leader in the design, manufacture and marketing of hard disc drives, providing products for a wide-range of Enterprise, Desktop, Mobile Computing, and Consumer Electronics applications. 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 was named 2006 Company of the Year by Forbes Magazine. Seagate can be found around the globe and at www.seagate.com.</p>
<p>Safe Harbor</p>
<p>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 future financial performance, 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 release and current expectations, forecasts and assumptions and 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 the company’s ability to successfully manufacture in increasing volumes on a cost-effective basis and with acceptable quality its current disc drive products; the adverse impact of competitive product announcements and possible excess industry supply with respect to particular disc drive products; and the impact of the announced transaction between the company and Maxtor Corporation on current customer demand during the period prior to a closing of the transaction. 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 1, 2005 and in the company’s Quarterly Report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on October 28, 2005. 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.</p>
<p># # #</p>
<p>Submitted on behalf of Seagate Technology by Einsteinz Communications (02) 9965 7227</p>

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