Seagate: Fiscal 3Q10 Financial Results

(in US$ millions)	3Q09	3Q010	9 mo. 09	9 mo. 10
Revenues	2,150	3,049	7,452	8,739
*Growth*		42%		*17%*
Net income (loss)	(275)	518	(3,042)	1,230

Seagate Technology LLC reported financial results for the quarter ended April 2, 2010 of 50.3 million disk drive unit shipments, revenue of $3.05 billion, gross margin of 29.6%, net income of $518 million and diluted earnings per share of $1.00. The financial results for the quarter include $9 million of purchased intangibles amortization expense and $4 million of restructuring charges. The aggregate impact of these expense items is $13 million or approximately $0.03 per diluted share.

For the nine months ended April 2, 2010 the company reported 146.5 million disk drive unit shipments, revenue of $8.74 billion, gross margin of 28.3%, net income of $1.23 billion and diluted earnings per share of $2.38. The financial results for the nine months ended April 2, 2010 include $29 million of purchased intangibles amortization expense, $50 million of restructuring costs and a write down of long-lived assets of $64 million. The aggregate impact of these expense items is $143 million or approximately $0.28 per diluted share.

“Consistent with our expectations at the beginning of the March quarter, we achieved strong operational and financial results,” said Steve Luczo, Seagate CEO. “We delivered record shipments while our inventory levels at our OEM and distribution customers remained at nearly all time lows across all geographies and all product offerings. Demand for Seagate products remains very strong and we expect to see tight supply throughout the remainder of the calendar year.”

Comments

Abstracts of the earnings call transcript:

Bob Whitmore, EVP and CTO:

"Seagate shipped 5.1 million drives for mission critical server and storage applications during the quarter, representing an 11% increase quarter-over-quarter.

"The TAM and the desktop market for the March quarter was approximately 65.1 million units, up 4% sequentially, and up 24% year-over-year. Seagate shipped 24.6 million units in this space. For the June quarter we expect the desktop TAM to be flat sequentially.

"Seagate shipped 13.7 million units into the mobile compute market, an increase of 54% from the year ago quarter. The overall TAM in the mobile compute space was approximately 71 million units in the March quarter, essentially flat sequentially and up 65% year-over-year.

"Finally, we believe that the retail market for both Seagate branded products and for the external Box Builders that we service saw relatively flat demand quarter-over-quarter, with high growth in Asia tampered by seasonal slowdowns in the U.S. and Europe."

Pat O'Malley, EVP and CFO

"Now, I like to update the outlook for the June quarter. The key assumptions on which we are based our outlook are a historical pattern for unit demand which for June quarter is down 2% to 5% sequentially.

"Pricing trends better than historical for June quarter, reflecting a balance supply and demand environment. And our competition will likely improve the current enterprise class product offering and Seagate share in this market will trend closer to historical levels.

"As a result, for the June quarter the Company expects the following: Industry unit TAM of 155 million to 160 million. Revenue of $2.85 billion to $3.05 billion. R&D and SG&A costs were approximately $340 million."