Seagate reports fiscal Q4 and year-end 2010 financial results

DQW Bureau
23 Jul 2010



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.”

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