Seagate Turns From Loss to Profit - TheStreet

Seagate Turns From Loss to Profit

Despite slow PC sales, the company managed a 9% year-over-year increase.
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Updated from 5:04 p.m. EDT

Hard-drive maker

Seagate Technology

(STX) - Get Report

on Tuesday announced that it turned a 33-cent profit in its fiscal fourth quarter of 2003, compared to a loss of 49 cents a year ago.

The Scotts Valley, Calif., company reported revenue of $1.55 billion, up 4.7% from the June quarter a year ago.

The year-ago quarter included a pretax charge for deferred compensation of $179 million and costs related to debt refinancing of $93 million.

Both earnings and revenue in the just-closed quarter were a bit better than expected by Wall Street. The consensus of analysts polled by Thomson First Call was for earnings of 31 cents on sales of $1.54 billion.

Seagate's guidance for the September quarter is roughly in-line with analysts' expectations. The company expects to earn between 33 cents and 37 cents and post revenue of $1.6 billion to $1.64 billion; analysts were expecting a profit of 34 cents on sales of $1.64 billion.

"I'm very proud of the financial and operational achievements we've made in what is traditionally the most challenging quarter for the industry," Steve Luczo, Seagate chairman and chief executive officer said in a prepared statement. "Our fourth-quarter results and year-on-year growth provide strong evidence that our strategy and business model are growing value for shareholders, and reflect the continuing dedication and contribution of our employees.

For the full fiscal year ended June 27, Seagate reported diluted earnings of $1.36 a share on sales of $6.49 billion. In fiscal 2002, the company earned 36 cents a share on sales of $6.09 billion.

Despite the generally slow sales of PCs, Seagate managed to sell 15.9 million disc drives in the June quarter, a 9% increase year over year.

Seagate recently entered the market for notebook storage with a product called Momentus. Although the company did not give a breakout of unit shipments, it did say that the product is on track to meet Seagate's goal of 10% market share at the end of fiscal 2004.

Stronger margins on enterprise products and higher manufacturing yields helped the company raise gross margins to 27.6% from 26.8% in the preceding quarter. A year ago, gross margins were 23.7%.

As announced earlier in the year, Seagate raised its dividend from 3 cents to 4 cents a share for all common shareholders of record as of August, 8, 2002.

The company lost 35 cents, or 1.67%, to close at $20.65 on Wednesday, and had gained back 24 cents after hours.