Seagate Reports Lower Revenue But Sharply Higher Profits

The drop in revenue and rise in profits came as the number of hard drives Seagate shipped in the quarter fell from last year in the midst of one of the biggest downturns in IT spending since the dot-com implosion.

Seagate on Tuesday reported revenue for its first fiscal quarter, ended Oct. 2, of $2.7 billion, which was down about 10 percent from the $3 billion it reported in the first quarter of 2008.

The company also reported income of $179 million, or 35 cents per share, more than triple the $57 million, or 12 cents per share, it reported in the same period last year, thanks to cost-cutting measures and a reduction in company debt.

The fall in revenue came, in large part, due to a drop in hard drive sales. Seagate said it shipped 46.3 million hard drives during the quarter, which was down about 9 percent compared to the 48 million hard drives it sold during the same period last year.

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Looking forward, Seagate said it expects overall industry hard drive demand for hard drives to be between 153 million to 160 million drives during its second fiscal quarter. As a result, the company said it expects revenue to be between $2.75 billion and $2.85 billion, which is down significantly from the $3.4 billion it reported on sales of 50 million hard drives in the same period last year.

Despite the current challenging economic conditions, Seagate is pleased with its performance in its first fiscal quarter, said CEO Steve Luczo in a statement.

"Although mission-critical enterprise demand in particular has yet to recover to historical levels, we benefited from our time-to-market product delivery to customers integrating our notebook, desktop and enterprise drives," Luczo said.