Seagate Swings to Sizable Loss

Storage specialist Seagate(STX Quote) has met analysts' sales guidance but swung to a $273 million loss in its third-quarter results.

Seagate reported third-quarter sales of $2.1 billion, down from $3.1 billion in the same period last year, but just above Wall Street's forecast of $2.01 billion.

The revenue figure did not exactly come out of the blue. Seagate recently forecast better-than-expected revenue and gross margin in its preliminary third-quarter results. The Scotts Valley, Calif.-based firm had initially forecast revenue of $1.6 billion to $2 billion, but raised this figure following strong sales of its 2.5-inch and 3.5-inch products.

Seagate nonetheless posted a loss of 56 cents a share, and a net loss of $273 million, compared to earnings of 68 cents a share and profit of $344 million in the year-ago quarter. Analysts had forecast a loss of 45 cents a share.

The storage firm is in the throes of a major restructuring effort and has recently reworked its credit facility. Charges associated with Seagate's restructuring and acquisitions contributed a loss of $54 million, or approximately 11 cents a share, to the third-quarter results.

"I am impressed by the progress we're making in improving our operational performance," said Segate CEO Steve Luczo in a statement released Tuesday. "As a result, assuming a relatively stable business environment, we believe we can improve margins and reach profitability within fiscal year 2010."

Seagate, which competes with Fujitsu and Western Digital(WDC Quote), predicts flat demand for disk drives in the fourth quarter.