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

To: Anthony Wong who wrote (6646)	1/12/1999 10:18:00 PM
From: Anthony Wong	Respond to of 7841

[Dow Jones] 20:13 T =Seagate Tech Finishes Strong, Exceeds Analysts Views PHOENIX (Dow Jones)--A strong finish boosted Seagate Technology Inc.'s (SEG) second-quarter revenue and earnings past analysts' expectations. Normally business slows down in the last two weeks of the second quarter of Seagate's fiscal year, as Christmas demand ends and computer makers slow production, Steve Luczo, the company's chief executive officer told Dow Jones. "That didn't happen this quarter," he said. "We didn't anticipate that." On Tuesday Seagate posted net income of 42 cents a diluted share for the quarter that ended Jan. 1, compared with a year-ago loss of 8 cents a share, excluding charges. The latest number was 61% better than the consensus estimate of 26 cents among 11 analysts surveyed by First Call Corp. Luczo attributed the Scotts Valley, Calif., disk drive maker's vigorous finish to "lean inventories" among suppliers and original equipment manufacturers in the computer industry. Mark Specker, an analyst for SoundView Technology Group, said that corporate expenditures to prepare for the Year 2000 appeared to be a contributing factor to end-of-quarter demand. But Luczo declined to attribute the strong finish to Y2K-related spending patterns, which he said "could cut either way" to affect demand during this period. Chuck Hill of First Call Corp. noted that Intel Corp. (INTC) and Yahoo! Inc. (YHOO) had also posted better than expected numbers Tuesday. "It's a big day for technology," he said. Analysts pointed to Intel's strong performance as evidence of healthy demand from computer makers during the quarter. Seagate reported total sales of $1.8 billion during the quarter, which is the second of its fiscal year. Luczo said that drive sales were about $1.6 billion or 8.3 million units. Sales of high-end drives for large computers were $846 million, while sales of products for desktops were about $775 million, he said. During the quarter pricing pressures eased somewhat in the desktop segment, but not in the in the high-end market, where Seagate competes with International Business Machines Corp. (IBM) and Fujitsu (J.FUT), Luczo said. "High-end pricing and price erosion was aggressive and continues to be aggressive," he said. (MORE) DOW JONES NEWS 01-12-99 08:13 PM

To: Anthony Wong who wrote (6646)	1/12/1999 10:20:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 7841

[Dow Jones] 20:34 T =Seagate Tech-2: Sees Flat To Modest Growth In 3Q Vs 2Q While the number of companies in the disk drive industry hasn't declined as a result of slumping demand during the past year, several have been losing money, Luczo, Seagate's chief executive officer, said. "Pricing levels are very, very competitive," he said. Luczo declined to break down to what extent Seagate's second-quarter gains came from better market conditions and to what extent they reflected operating improvements. "The real measure (of progress) is going to be how do you respond to the dark periods of the future," he said. At Seagate management is "positioning the company to have (these) kind of results in a very tough environment," Luczo said. "We still have a lot of work in front of us." But the company pointed to evidence of improved productivity and competitiveness in the second-quarter results, including a gross margin of 23.8%, up from 20.7% during the first quarter. The margin on software sales, which totaled $92 million in the second quarter, was 86.9%, Luczo said. Seagate's inventory fell to $410 million at the end of the second quarter, down from $761 million at the end of the first quarter, but that didn't satisfy Luczo. "We can do better," he said. Cost of goods sold on an annual basis was 13.4 times the company's quarter-ending inventory, but Seagate wants to boost that ratio to 15, he said. Seagate has also reduced the time it takes to get new products on the market so that it introduces innovations during the same quarter as its competitors, but it hasn't yet achieved its goal of being the leader in time to market, he said. Seagate's cash position grew $345 million, to $2.2 billion, during the second quarter. That advance was boosted by a $140 million tax refund and was net of a $100 million stock repurchase, Luczo said. Total employment fell to 83,900 at the end of the quarter, down from 85,300 at the end of the previous quarter. Although the winter season is normally slow, Seagate expects "flat (to) modest growth ... for the company in the third quarter with improving margins" compared with the quarter just reported. Seagate expects the pending sale of a portion of its software business to be completed by the end of the third quarter. -By Rick Jurgens; 602-258-2003; richard.jurgens@cor.dowjones.com (END) DOW JONES NEWS 01-12-99 08:34 PM