Bloomberg: Seagate's Fiscal 2nd-Qtr Net Rises to $104 Million (Update2)
Bloomberg News
January 12, 1999, 7:06 p.m. ET
Seagate's Fiscal 2nd-Qtr Net Rises to $104 Million (Update2)
(Adds additional CEO comment, detail.)
Scotts Valley, California, Jan. 12 (Bloomberg) -- Seagate
Technology Inc., the No. 1 independent computer disk-drive maker,
had fiscal second-quarter net income of $104 million, or 42 cents
a share, beating expectations as it benefited from cutting costs
and a surge in personal-computer sales.
The earnings compare with a year-earlier loss before charges
of $20.2 million, or 8 cents. The company was expected to earn
26 cents a share in the quarter ended Jan. 1, the average
estimate of analysts surveyed by First Call Corp. Revenue rose
7.7 percent to $1.8 billion from $1.67 billion.
Disk-drive makers were hurt most of last year as prices were
pushed down by a glut in their products, which store information
and programs from spreadsheets to e-mail to games. The slimmed-
down Seagate is benefiting from retailers' 41 percent rise in PC
sales during December.
''This has definitely been a better quarter after a tough
year and a half, with the cuts and high-volume PC sales making a
contribution,'' said Jean W. Orr, a Nutmeg Securities Ltd.
analyst, who rates Seagate a ''hold.''
Seagate rose 7/8 to 38 15/16. It reported earnings after the
close of U.S. trading. Its shares have risen 72 percent since its
fiscal first-quarter earnings report Oct. 14.
Job Cuts
Scotts Valley, California-based Seagate said last January
that it planned to cut 10 percent of its workforce, or about
10,000 employees, and trim production. Luczo told the Bloomberg
Forum late Tuesday that it has cut 17 percent of its workforce,
with about 83,873 workers remaining.
Seagate has been looking for ways to concentrate more on its
hard-disk and tape-storage businesses, which became increasingly
more competitive. International Business Machines Corp., the No.
1 computer maker, has been challenging Seagate's high-end disk
business, as other competitors such as Western Digital Corp. and
Quantum Corp. chip away at the mainstream PC market.
''Pricing remains competitive ... but Europe was strong, and
we expect it to remain strong for the next two to three
quarters,'' said Stephen Luczo, president and chief executive, in
a conference call with analysts after the company's announcement.
Luczo said Seagate made significant inroads in selling its
products to computer companies such as Dell Computer Corp.,
Gateway 2000 Inc. and Compaq Computer Corp.
In October, Seagate said it plans to close its semiconductor
factory in Livingston, Scotland, eliminating 262 jobs, after
failing to find a buyer.
Seagate also announced in October that it planned to sell
one of its software subsidiaries to Veritas Software Corp., which
would issue about 33 million shares for the purchase. At the
time, the purchase was valued at $1.6 billion, and Seagate would
have a 35 percent stake in the combined company.
Luczo told analysts that he expects the purchase to close
this quarter for about $2.17 billion, with Seagate recognizing a
pretax gain in the quarter of $1.25 billion.
After restructuring and other charges in the year-earlier
quarter, Seagate had a final loss of $183.2 million, or 75 cents
a share.
--John Stebbins in the Chicago newsroom (312) 692-3724/bab/jcn |
