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Technology Stocks : Seagate Technology -- Ignore unavailable to you. Want to Upgrade?

To: CPAMarty who wrote (5240)	7/14/1998 8:45:00 PM
From: Alan Casey	Respond to of 7841

Software Helps Seagate Pull Ahead (07/14/98; 7:24 p.m. ET) By Gabrielle Jonas, TechInvestor Disk-drive maker Seagate Technology closed out a tough year on the upside, beating Wall Street earnings estimates in its fourth quarter. After market close Tuesday, Scotts Valley, Calif.-based Seagate reported net income of $22 million, or 9 cents a share, on revenue of $1.6 billion, compared with net income of $59 million, or 23 cents per share, on revenue of $1.98 billion in the comparable quarter a year ago. Wall Street analysts were expecting profits of 6 cents a share, according to First Call. "We had a very good quarter on the operating side with good growth and good margins," said Steve Luczo, president and chief operating officer, in a conference call. "We were extremely competent on the desktop, where Seagate hasn't been well-positioned for several quarters." The storage company took a charge of $7 million for its acquisition of Eastman Software's Storage Management Group. Excluding the charge, operating income was 11 cents per share for the quarter. For the year, Seagate showed a net loss of $530 million, or $2.17 a share, on revenue of $6.8 billion. Excluding charges, the company earned a penny per share. In fiscal 1997, the company reported profits of $658 million, or $2.62 a share, on $8.9 billion in sales. In a conference call with investors Tuesday, Luczo said inventory turns were 10.1 vs. 10.6 turns in the prior quarter. Gross margins were 18.9 percent, thanks in large part to Seagate Software. For all but the software business, gross margins were 15.4. Luczo said gross margins rose sequentially both in the company's tape and software business. "We didn't see improvement in all categories, but we saw improvement overall," he said. The company expects moderate improvement of gross margins next quarter, Luczo added. "The high-end market is showing some firmness and will continue to show strength," Luczo said. But the impact of new products for that segment won't be felt for several quarters, he added. Product delays have been a problem for Seagate. The company's 10,000-rotations-per-minute drive, the Cheetah, was eight months late to market, but is now ramping up, Luczo said. "We're expecting very strong growth in the Cheetah product line over the next several quarters," Luczo said. "We're about six months to market over IBM on that class of products." Shares of Seagate [SEG] closed down 15/16 to 25 1/16 ahead of the news.