Seagate's Drive Sales Soar As Profits Rise

Seagate, Scotts Valley, Calif., reported that it shipped about 50 million hard disk drives during the quarter, which ended December 20, up about 20 percent over the number of drives it sold during the same quarter last year.

As a result, revenue for the quarter was $3.4 billion, up 14 percent over the $3.0 billion it reported during the same quarter last year. Earnings for the second quarter reached $403 million, or 73 cents per share, up nearly three times its earnings last year of $140 million, or 23 cents per share.

The earnings numbers reflect about $31 million of purchased intangibles amortization and other charges associated with Seagate's acquisitions of Maxtor, EVault, and MetaLINCS, as well as a net gain from asset sales of approximately $15 million.

Seagate acquired fellow hard drive vendor Maxtor in a major shakeup of the hard drive industry in mid-2006.

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The vendor also acquired EVault, a developer of technology for on-line data backup and recovery, just over a year ago.

"Seagate's strong financial performance in the quarter reflects the company's solid business model and expanded product portfolio, which positioned us well in a favorable industry environment characterized by seasonal strength across all storage markets and continued growth in global demand," said Bill Watkins, Seagate chief executive officer, in a statement.

"During the quarter, Seagate achieved record shipments and experienced some capacity constraints, underscoring the phenomenal growth of digital content in both the consumer and commercial markets. . . . The storage industry remains one of the world's most important and exciting industries," Watkins said. "We are confident Seagate's vision, technology, and operational excellence will drive us to continued strong financial and operating performance in the March quarter and double-digit year-over-year growth."

For its third quarter, Seagate said it expects to report revenue of $3.2 billion to $3.3 billion, which is about 15 percent higher than what it reported for last year's third quarter. Earnings are expected to be between 57 cents and 61 cents per share, with non-GAAP earnings in the 62 cents to 67 cents range, up 36 percent over last year.