Seagate reports fiscal Q4 and year-end 2010 financial results

Seagate has reported financial results

for the quarter that ended on July 2. The results recorded 46.8

million disk drive unit shipments, revenue of $2.66 billion, gross

margin of 27.4 percent, net income of $379 million and diluted

earnings per share of $0.76. The financial results for the quarter

include $6 million of purchased intangibles amortization expense, $16

million of restructuring charges, $3 million expense (other

income/expense) for the May 2010 termination of Seagate's revolving

credit facility offset by a $6 million recovery of previously

impaired long-lived assets and a $50 million income tax benefit due

principally to valuation allowance adjustments related to deferred

tax assets. The aggregate impact of these items was a $31 million

increase to net income or approximately $0.06 per diluted share.

For the fiscal year that ended on July

2, the company reported 193.2 million disk drive unit shipments,

revenue of $11.4 billion, gross margin of 28.1 percent, net income of

$1.61 billion and diluted earnings per share of $3.14. The financial

results for the fiscal year ended on July 2 include $35 million of

purchased intangibles amortization expense, $66 million of

restructuring costs, $3 million expense (other income/expense)

related to the May 2010 termination of the revolving credit line, a

net write down of long-lived assets of $57 million offset by a $50

million income tax benefit due principally to valuation allowance

adjustments related to deferred tax assets. The aggregate impact of

these items was a $111 million reduction of net income or

approximately $0.22 per diluted share.

“I'm very encouraged by our financial

and operational performance throughout fiscal 2010,” said Steve

Luczo, Seagate Chairman, President and CEO. “In fiscal year 2010 we

delivered record shipments, profitability and operating margin. The

company responded well to the increase in global hard drive demand,

which grew 22 percent YoY, introduced key new products, continued to

strengthen the capital structure, and remained focused on improving

key business fundamentals to position company for future growth.

“Specific to our fiscal fourth

quarter, two of our key assumptions entering the quarter did not

materialize as expected and impacted our financial results —

macro-economic stability and pricing reflective of balanced supply

and demand. Industry demand in the fiscal fourth quarter was at the

low end of our expectations primarily due to issues emanating from

the debt crisis in Europe and slowing consumer spending especially in

the countries like US and Europe. The lower unit shipments and

unfavorable pricing at some key capacity points impacted comapny's

ability to deliver revenue and earnings for the quarter within our

target range. Despite these factors, the company reported highest

operating results for the June quarter in its history.”