Seagate Reports Strong Quarterly Growth To Close Out 2009
January 20, 2010 5:36 PM ET
Seagate Technology ended 2009 with much better news to tell investors than it delivered a year earlier, on Wednesday reporting a $533 million profit on sales of $3.03 billion for its fiscal second quarter ending Jan. 1, 2010. A year earlier, Scotts Valley, Calif.-based Seagate took a $2.8 billion loss for the fiscal period covering the final three months of 2008.
"Our strong financial performance in the December quarter was the result of our ongoing progress in driving operational efficiencies, our leadership position in high capacity, high performance products, an improved product mix and the overall strength of demand for digital storage," said Seagate CEO Steve Luczo in a statement accompanying the disk drive maker's earnings report.
Seagate was able to exceed its own guidance for the just-concluded quarter due to several factors, including "linear demand" for its products and a boost in computer sales following the release of Microsoft's Windows 7 operating system, Luczo said during a Wednesday call with financial analysts.
The disk drive giant reported diluted earnings per share of $1.03 and gross margin of 30.5 percent for the last quarter of 2009.
Seagate shipped 49.9 million disk drive units in its December quarter, up significantly from the same period a year earlier, and reported 96.2 million total unit shipments for the second half of last year. Revenue for the last six months of 2009 was $5.69 billion with net income of $712 million.
The strong second half also had a positive effect on the balance sheet, the company said. Seagate had debt of about $1 billion at the end of 2008 but enters 2010 with some $200 million of cash in hand.
The company also said that 75 percent of its December quarter disk drive shipments for PCs were 500GB or larger, the fruition of a transition in product mix that Seagate has been undergoing for several quarters.
Regarding inventory, the company said there might be "some backlog" of inventory at smaller channel outlets globally, but OEMs and larger Seagate channel partners were experiencing no such issues.
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