Seagate Technology (NASDAQ: STX) today reported results for the quarter ended July 3, 2009 of 40.6 million disk drive unit shipments, revenue of $2.35 billion, a net loss of $81 million and net loss per share of $0.16. The financial results for the quarter include $21 million of purchased intangibles amortization and other charges associated with acquisitions, and $85 million of restructuring and related accelerated depreciation charges. The aggregate impact of these items is $106 million or approximately $0.22 per share.
“The overall organizational, operational, technical and product progress we have made during the last six months is reflected in our financial results for the June quarter and demonstrates meaningful progress toward the goal of returning to sustained GAAP profitability as soon as possible,” said Steve Luczo, Seagate CEO. “We are also seeing signs that the storage markets are improving and are providing better visibility into the demand environment. Our approach to the September quarter with respect to our production volumes and product mix is to continue to manage our factories with an intense focus on maximizing our return on invested capital while satisfying our customers’ requirements."
For the fiscal year ended July 3, 2009, the company reported disk drive unit shipments of 163.8 million, revenue of $9.8 billion, a net loss of $3.1 billion, and net loss per share of $6.32. The financial results for the fiscal year include $77 million of purchased intangibles amortization and other charges associated with acquisitions, charges related to restructuring activities of $266 million, a charge of $271 million that reflects an unfavorable adjustment to the valuation allowance related to the company’s deferred tax assets and a $2.3 billion charge relating to the write-off of goodwill and other long-lived assets. The aggregate impact of these items is a $2.9 billion reduction in earnings, or a decrease of approximately $5.95 per share. Of the $266 million in restructuring related charges, $56 million was for accelerated depreciation charges, with $30 million recorded in cost of revenue and $26 million in product development expense. The majority of the remaining balance of the restructuring charges relate to global headcount reductions.
Business Outlook
While there are signs of improved visibility, the ongoing uncertainty in global economic conditions makes it difficult to predict product demand and other related matters, which makes it more likely that Seagate’s actual results could differ materially from current expectations.
For the September quarter, the company is planning for the overall industry demand for disk drives to be 135-140 million units. Consequently, the company expects revenue to be approximately $2.4 - $2.6 billion and gross margin as a percent of revenue to improve by 200-350 basis points as compared to the June quarter. Product development and marketing/administrative costs are expected to decrease to approximately $315 million while other income and expense is expected to be a charge of approximately $40 million.
The September quarter outlook does not include the impact of any potential new restructuring activities, future mergers, acquisitions, financing, dispositions or other business combinations the company may undertake.
Additional information relating to the financial results for the fiscal fourth quarter and year-end 2009 can be found online at seagate.com.
Seagate is the world leader in hard disk drives and storage solutions. Learn more at 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 in the September 2009 quarter, and thereafter, and include statements regarding expected revenue, gross margin, product competition, customer demand for disk drives, the Company’s ability to return to profitability 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, the decline in global economic conditions continues to pose a risk to the Company’s operating and financial performance as consumers and businesses have, and may continue to, defer purchases in response to tighter credit and negative financial conditions. 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; and the Company’s ability to achieve projected cost savings in connection with restructuring plans. Information concerning risks, 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, and in the Company’s Quarterly Report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on May 6, 2009, 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.