Tax Break Beefs Up Seagate's Profits

Hard-disk drive maker Seagate (STX Quote) on Thursday posted a rise in fourth-quarter net income thanks to a gain from a one-time tax benefit.

Seagate reported a profit of $541 million, or 96 cents a share, vs. $7 million, or a penny a share, during the same quarter last year.

This year's net income includes certain one-time charges from the Maxtor acquisition as well as a tax gain of $359 million. It's not immediately clear what Seagate's earnings per share would have been without this tax gain.

Analysts forecast EPS of 36 cents, which would have been a 33% improvement.

Revenue rose 8.5% to $2.74 billion, edging above analysts' average estimate.

"Our results for the year as a whole, as well as for this quarter, demonstrate the continued strength of the digital-storage industry and the positive impact of several important strategic steps we have taken to secure and extend our industry leadership," CEO Bill Watkins said in a statement.

For the year, cash generated from operations fell 35% to $943 million.

For the current quarter, Seagate forecast earnings of 40 cents to 44 cents a share, excluding one-time items from the Maxtor acquisition. Analysts polled by First Call had been expecting earnings of 45 cents a share, on average, including stock option expenses but not other nonrecurring charges or gains.

Seagate expects first-quarter revenue to fall between $2.9 billion and $3 billion. The midpoint of this range is above analysts' average estimate.

Shares were recently up 38 cents, or 1.6%, to $24.50.