Seagate surprises and reports a profit of one cent for the quarter......................
Much of the growth comes from Internet-related businesses and service providers that need to store large amounts of data. And though ``significantly' lower prices did hurt sales, President and Chief Executive Stephen Luczo said in an interview that low PC prices helped expand the market as more consumers could afford computers.
Seagate shares fell 3/8 to 31 3/8. The announcement came after the close of regular U.S. trading.
Restructuring Savings
Last month, Seagate said it would cut 8,000 jobs, or 10 percent of its workers, as part of a plan to streamline operations as prices fall.
Companies are struggling in part because PC makers are slashing prices every month, putting pressure on their suppliers to cut component costs. Seagate has been aggressive in selling drives for even the cheapest PCs. It also makes drives for higher- end computers and computer networks.
``Pricing remains extremely aggressive. We just re-geared our business to recognize that's the environment we're in,' Luczo said on a conference call.
Seagate expects the restructuring to save $81 million this year. It produced 25 percent more disk drives than two years ago with 27 percent fewer people, Luczo said. Capital expenditures dropped 35 percent, while inventory was cut in half over the same period.
Though price pressures will keep sales flat this year, he said cost-cutting will bring continued profits.
Last year's quarter included $84 million in charges.
Oct/12/1999 19:36
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