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

To: TechMeister who wrote (5246)	7/14/1998 11:34:00 PM
From: DJBEINO	Respond to of 7841

Seagate's 4th-Qtr Profit 11c-Shr, Beating Forecasts Bloomberg News July 14, 1998, 5:28 p.m. PT Scotts Valley, California, July 14 (Bloomberg) -- Seagate Technology Inc.'s fiscal fourth-quarter profit fell less than expected, as cost cuts and strong sales of its high-end storage products helped blunt a sharp drop in prices of its disk drives for personal computers. The No. 1 independent computer disk-drive maker said profit before charges fell to $26.6 million, or 11 cents a diluted share, in the quarter ended July 3 from profit of 61 cents in the year-ago period. That was better than the 6 cent-a-share consensus estimate of analysts, according to First Call Corp. Seagate and other disk-drive makers have been hurt by falling prices for drives and slowing sales of personal computers. Seagate shares have tumbled 36 percent in the past 12 months, while the Standard & Poor's 500 Index has gained 28 percent. Still, results improved from the third quarter, suggesting Seagate may be turning things around. ''It was a solid quarter, continuing a trend where we started to see some improvements in internal efficiencies and time to market with their products,'' said analyst Mark Specker of SoundView Financial Group, who rates Seagate a ''short-term hold'' and a ''long-term buy.'' Scotts Valley, California-based Seagate said that including charges it had net income of $22 million, or 9 cents a diluted share, compared with net income of $59 million, or 23 cents, a year ago. Revenue fell 20 percent to $1.58 billion from $1.98 billion. Improvement The company took a fourth-quarter charge of $7 million pretax for in-process research and development related to its acquisition of Eastman Software's storage management group. A year ago, Seagate had pretax charges of $155 million for litigation and restructuring. The company didn't provide profit figures excluding charges for the year-ago quarter. ''It's our expectation that we can improve from here in the first quarter,'' said Stephen Luczo, president and chief operating officer, in an interview. The company's gross margin -- or percentage of revenue minus product costs -- widened to 18.9 percent in the fourth quarter from 12.2 percent in the third, driven by increased internal efficiencies and stronger sales of the company's more expensive drives used to store massive amounts of information. Those devices carry fatter profit margins. Luczo said pricing on drives used in PCs remains competitive, and shows no signs of letting up until later in the year. That pricing pressure, though, was somewhat offset by strength in high-end drives. ''At the high end, the pricing is tough, but not as brutal as what's been going on in desktop,'' Luczo said. Seagate issued its report after the close of regular U.S. trading. Before the report, Seagate shares fell 15/16 to 25 1/16. In trading after the close of U.S. markets, Seagate rose as high as 26 1/2, suggesting that investors approve of the changes being implemented by Luczo, who took over as president in September.