Bangkok--26 Oct--Seagate Technology
- Revenue grows 34%
- Company meets high-end of its revenue and earnings guidance
- Ships record 39 million units, 3.7 million based on perpendicular recording
- Board raises quarterly dividend to $0.10 per share
Seagate Technology (NYSE: STX) today reported revenue of $2.8 billion, GAAP net income of $59 million, and diluted earnings per share of $0.10 for the quarter ended September 29, 2006. Included in the $2.8 billion of revenue is approximately $344 million from legacy Maxtor designed products. Net income and diluted earnings per share includes approximately $82 million of charges directly associated with the Maxtor acquisition. Excluding acquisition related charges and a favorable adjustment to a pre-existing restructuring reserve of $4 million, non-GAAP net income and diluted earnings per share were $137 million and $0.23.
In the year-ago quarter, Seagate reported revenue of $2.09 billion, GAAP net income of $272 million and diluted earnings per share of $0.54.
“Seagate delivered another strong performance in the September quarter, reflecting our leadership position in a marketplace characterized by continued healthy growth in demand for storage,” said Bill Watkins, Seagate chief executive officer. “I’m pleased that we achieved the results we outlined for the quarter. Our integration of Maxtor continues ahead of schedule, allowing us to complete the customer transition to more cost-effective Seagate products during the December quarter.
“During the quarter, we continued to see an aggressive pricing environment in the notebook and desktop markets, resulting from what we believe are competitors who seem intent on trying to capture market share without regard to profitability. I’m pleased, particularly in the face of this environment, with the revenue retention we have achieved, and we are confident in our ability to continue to reduce cost and improve profitability throughout the year. As the leading manufacturer in the disc drive industry, we are operating from a position of strength, from both a cost and product leadership perspective. Moving forward, while we remain committed to pricing discipline, we intend to maintain our current share position, and will manage our pricing strategy accordingly.”
Additional information relating to the financial results for the first fiscal quarter of 2007 can be found online at http://www.seagate.com/newsinfo/invest .
Pricing
The average selling price, on a blended basis, decreased approximately $4.00 from the June quarter. In aggregate, price decreases on a “like for like” product basis during the September quarter were in excess of 6%, which was in line with the company’s expectations at the beginning of the quarter.
Business Outlook
For fiscal year 2007, excluding acquisition related costs but including Maxtor’s operating results, Seagate now expects $11.4-11.8 billion in revenue and $1.70-1.80 for Non-GAAP diluted earnings per share. Including approximately $210 million of expected acquisition related costs and $18 million of fees associated with the early redemption of the 8% notes, GAAP diluted earnings per share would be $1.35-$1.45. The company’s adjusted revenue and earnings outlook for fiscal 2007 reflects a pricing environment in the desktop and notebook markets that became more aggressive at the end of the September quarter, thus impacting pricing for subsequent quarters. In the second half of its fiscal year, Seagate will benefit from new products, new market opportunities and the completion of the Maxtor integration.
For the December quarter, Seagate expects to report revenue of $2.8-3.0 billion, and diluted earnings per share of $0.30-0.34, excluding acquisition related costs but including Maxtor’s operating results. Included in the company’s outlook for the December quarter is an unfavorable impact to gross margin and earnings of approximately $30 million of unplanned costs associated with legacy Maxtor drives. GAAP diluted earnings per share for the December quarter, including approximately $60 million of expected acquisition related costs and $18 million of fees associated with the early redemption of the 8% notes, would be $0.17-0.21.
Dividend and Stock Repurchase
The board of directors has approved an increase in the quarterly dividend from $0.08 to $0.10 per share. The company has declared the quarterly dividend to be paid on or before November 17, 2006 to all common shareholders of record as of November 3, 2006.
During the quarter ended September 29, 2006, the company repurchased 6.7 million common shares worth approximately $150 million. The company has approximately $2.35 billion available under the current authorized stock repurchase program.
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 & Canada: (877) 223-6202
International: (706) 679-3742
Replay
A replay will be available beginning October 24 at 5 p.m. Pacific Time through October 31 at 8:59 p.m. Pacific Time. The replay can be accessed from www.seagate.com/newsinfo/invest or by phone as follows:
USA: (800) 642-1687
International: (706) 645-9291
Conference ID: 8247413
For more information please visit: http://www.seagate.com/newsinfo/invest/financial_info
A podcast featuring Bill Watkins 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 2:00 p.m. Pacific Time.