Maxtor Expects Second Fiscal Quarter Results to be Significantly Below Previous Expectations
MILPITAS, Calif., June 14 /PRNewswire/ -- Maxtor Corp. (Nasdaq: MXTR - news) today stated that the company expects to report a loss for its second fiscal quarter, ending July 3, 1999. The loss is currently expected to be between $23 and $33 million which includes a non-operating gain of $22 million from the sale of stock acquired as a result of the merger of a former subsidiary. The loss is due to extremely aggressive pricing in the desktop hard disk drive market which worsened substantially during the second month of the quarter. Despite the difficult pricing environment, the company's cash balance is expected to remain relatively unchanged from the previous quarter.
''The pricing environment has deteriorated significantly from what we saw earlier this quarter,'' said Mike Cannon, Maxtor's president and CEO. ''As we reviewed results from the second month of the quarter, it became evident that the decline in pricing will be significantly greater than we anticipated in April. Our unit shipments and revenue will also be lower than we had expected, as we take appropriate steps to cut back on production and limit our participation in the channels in which pricing declines are the most problematic.
''In spite of the difficult pricing environment, our execution remains sound. We are pleased with OEM acceptance of our new DiamondMax 6800 drives, and qualifications are proceeding on schedule,'' Cannon continued. ''We are also pleased with the strength of OEM shipments of our 7200 RPM DiamondMax Plus products.''
This release contains forward-looking statements concerning the hard disk drive industry and Maxtor's execution. These statements are based on current expectations and are subject to risks and uncertainties which could materially affect the company's results, including, but not limited to, market demand for hard disk drives, market acceptance of the company's products, the company's ability to execute future production ramps and utilize manufacturing assets efficiently, changes in product and customer mix, pricing trends, and actions by competitors. These and other risk factors are contained in Maxtor's Registration Statement on form S-3 as well as in its periodic reports filed with the SEC.
About Maxtor
Maxtor is a leading supplier of hard disk drives for desktop computer systems. The company is the fastest growing supplier of hard disk drives for the desktop personal computer market, more than doubling its market share over the past one and a half years. The company's current products include the 5400 RPM DiamondMax 4320 and 6800, designed for mainstream desktop applications, and the 7200 RPM DiamondMax Plus 5120 series of drives which are designed to meet the needs of higher performance systems. More information about Maxtor and its products can be found at maxtor.com or by calling toll-free (800) 2-MAXTOR.
SOURCE: Maxtor Corp.
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