Seagate Q3 Beats Forecasts, Sees Q4 Revenues Flat
PALO ALTO, Calif. (Reuters) - Seagate Technology Inc. (NYSE:SEG - news) Tuesday reported a third quarter profit that was above most forecasts and marked a continued rebound from hefty losses a year ago.
However, the world's largest disk drive maker warned of some possible short-term weaknesses in revenues as it adapts new accounting procedures and completes the sale of a subsidiary to Veritas Software Corp (Nasdaq:VRTS - news) .
In an interview after the earnings were announced, Seagate President Steve Luczo said the company was operating on the assumption that its fourth quarter revenues would be flat, although it was positioned ''to take advantage of any upside.''
Seagate said it earned $82 million or 34 cents per share in the third quarter, compared with a loss of $129 million or 53 cents per share. Earnings in the latest quarter were reduced by a $60 million restructuring charge taken to cover the closure of a plant in Scotland and other consolidation efforts.
Excluding that charge, Seagate said its third quarter earnings were 49 cents per share, above the estimates of most analysts who had predicted a 46 cents per share profit, according to the research firm First Call Corp.
The company said revenues grew 7.7 percent to $1.81 billion from $1.68 billion a year ago.
Luczo said the company was generally pleased with the results, which were especially strong in the higher-end part of the market. He said revenues of the company's desktop products were lower than expected in the quarter.
Seagate also said Tuesday that it is changing the way it accounts for operations in North America to delay revenue recognition until the product is sold by distributors. It said this change will result in lower revenue from distribution in the fourth quarter than would have otherwise been recognized.
The latest results reflect an aggressive cost-cutting and restructuring effort by Seagate, which one year ago was plagued by fierce competition, overproduction and sagging prices.
''I think we're pretty far down the path (of recovery),'' Luczo said. ''I think our financial results show it.''
Ahead of the earnings news, Seagate shares closed up 44 cents Tuesday at $26.69 on the New York Stock Exchange.
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