London, England - 21 April 2009 - Seagate Technology (NASDAQ: STX) today reported results for the quarter ended April 3, 2009 of 38 million disk drive unit shipments, revenue of $2.1 billion, a net loss of $273 million and net loss per share of $0.56. Net loss and net loss per share for the quarter include $18 million of purchased intangibles amortization and other charges associated with acquisitions, and restructuring and related accelerated depreciation charges of $36 million. The aggregate impact of these items is a $54 million loss or approximately $0.11 per share loss. Of the $36 million for restructuring and related accelerated depreciation charges, $11 million was for accelerated depreciation charges recorded in product development expense and $25 million was restructuring and substantially relates to global headcount reductions.

For the nine months ended April 3, 2009 the company reported results of disk drive unit shipments of 123 million, revenue of $7.5 billion, a net loss of $3.0 billion, and net loss per share of $6.17. Net loss and net loss per share include $56 million of purchased intangibles amortization and other charges associated with acquisitions, charges related to restructuring activities of $181 million, a charge of $271 million that reflects an unfavorable adjustment to the valuation allowance related to the company’s deferred tax assets and a $2.3 billion charge relating to the write-off of goodwill and other long-lived assets. The aggregate impact of these items is a $2.8 billion reduction in earnings, or a decrease of approximately $5.75 per share. Of the $181 million in restructuring related charges, $55 million was for accelerated depreciation charges, with $30 million recorded in cost of revenue and $25 million in product development expense. The majority of the remaining balance of the restructuring charges relate to global headcount reductions.


“I am encouraged by the progress we’re making in improving our operational performance,” said Steve Luczo, Seagate chairman and chief executive officer. “As a result, assuming a relatively stable business environment, we believe we can improve margins and reach profitability within fiscal year 2010.”

Business Outlook
While there are signs of improved visibility, the ongoing uncertainty in global economic conditions makes it difficult to predict product demand and other related matters, which makes it more likely that Seagate’s actual results could differ materially from current expectations.

For the June quarter, in light of the company’s view of the current market environment, the company is planning for the overall demand for disk drives to be relatively flat as compared to the March quarter. Consequently, the company expects revenue to be approximately $1.9 - $2.2 billion and gross margin as a percent of revenue to improve by 300-400 basis points as compared to the March quarter. Product development and marketing/administrative costs are expected to decrease to approximately $340 million while other income and expense is expected to be an expense of approximately $40 million. Net loss per share is expected to be between $0.37 - $0.47, which includes approximately $41 million or $0.08 per share for restructuring, purchased intangibles amortization and other charges associated with acquisitions.

The fiscal fourth quarter 2009 outlook does not include the impact of any future mergers, acquisitions, dispositions or other business combinations, financing or potential new restructuring activities the company may undertake.

As part of the company’s ongoing cost structure alignment, additional restructuring actions are currently being addressed. The company believes opportunities exist to reduce operating costs in product development, marketing/administrative and manufacturing areas to target a cost structure that generates positive cash flow and earnings within its fiscal year 2010. Consequently, the company expects to incur restructuring charges in the June quarter of an undetermined amount.





Cash and Liquidity
The company remains focused on building liquidity and strengthening its balance sheet over the long-term. To that end, Seagate has taken actions and obtained sources of liquidity to support the business while the current negative economic condition persists. The results of these decisions and actions include:
·    On April 3, 2009, Seagate entered into a Second Amended and Restated Credit Agreement the purpose of which is to increase the company’s flexibility in meeting its obligations under its existing credit agreement, executed on September 19, 2006.
·    On April 16, 2009, Seagate priced $430 million of 10% senior secured second-priority notes due 2014. The net proceeds are expected to be used for general corporate purposes, including the repayment or repurchase of all or some of the company’s $300 million aggregate principal amount of floating rate senior notes due October 1, 2009 and other indebtedness.
·    Cash, cash equivalents and short-term investments increased $172 million quarter-over-quarter, to $1.5 billion.
·    Compared to the prior quarter, days sales outstanding (DSO) was down five days to 37 days, days payable outstanding (DPO) decreased by one day to 63 days and days of inventory outstanding (DIO) decreased by 11 days to 26. In aggregate, our cash conversion cycle decreased by 15 days to zero. Improvement in DSO reflects the linearity of shipments during the quarter, while the improvement in DIO is a result of reducing inventory by roughly 28%.
·    Investment in capital equipment during the March quarter was $59 million and for the first nine months of the company’s fiscal year 2009 was approximately $553 million. The company currently expects fiscal 2009 investment in capital equipment to be approximately $650 million. Based on the company’s current macroeconomic view it expects fiscal year 2010 capital investment to be approximately $450 million.
·    Management has recommended and the board has adopted a policy of not paying a quarterly dividend. This action coupled with the reduction of the dividend in January 2009 reduces cash obligations by about $230 million annually.

Additional information relating to the financial results for the third fiscal quarter of 2009 can be found online at seagate.com.

Conference Call
Seagate will hold a conference call to review the fiscal third quarter results at 2:00 p.m. Pacific Time today. The conference call can be accessed online at seagate.com or by phone as follows:
USA: (877) 223-6202
International: (706) 679-3742
Conference ID: 90458329

Replay
A replay will be available beginning today at 6:00 p.m. Pacific Time through April 28 at 8:59 p.m. Pacific Time. The replay can be accessed from seagate.com or by phone as follows:
USA: (800) 642-1687
International: (706) 645-9291
Conference ID: 90458329
About Seagate
Seagate is the worldwide leader in the design, manufacture and marketing of hard disk drives and storage solutions, providing products for a wide-range of applications, including Enterprise, Desktop, Mobile Computing, Consumer Electronics and Branded Solutions. Seagate's business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, with the goal of being the time-to-market leader in all markets in which it participates. The company is committed to providing award-winning products, customer support and reliability to meet the world's growing demand for information storage. Seagate can be found around the globe and at http://www.seagate.com.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements related to the company’s future operating and financial performance, including expected revenue, net loss and product competition, customer demand for our products, the impact of our recent and anticipated cost reduction efforts and general market conditions. These forward-looking statements are based on information available to Seagate as of the date of this press release. Current expectations, forecasts and assumptions involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the company's control. In particular, uncertainty in global economic conditions pose a risk to the overall economy as consumers and businesses may defer purchases in response to tighter credit and negative financial news. Such risks and uncertainties also include the impact of the variable demand and the aggressive pricing environment for disk drives, particularly in view of current business and economic conditions; dependence on Seagate’s ability to successfully qualify, manufacture and sell its disk drive products in increasing volumes on a cost-effective basis and with acceptable quality, particularly the new disk drive products with lower cost structures; the impact of competitive product announcements and possible excess industry supply with respect to particular disk drive products; and our ability to achieve projected cost savings in connection with our anticipated and announced restructuring plans. Information concerning risk, uncertainties and other factors that could cause results to differ materially from those projected in the forward-looking statements is contained in the company's Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission on August 13, 2008, and in the company’s Quarterly Report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on February 10, 2009, which statements are incorporated into this press release by reference. These forward-looking statements should not be relied upon as representing the company's views as of any subsequent date and Seagate undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.
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Contact:
Ian O’Leary +33 (0)1 41 86 10 04
ian.o’leary@seagate.com
Valerie Labrune +33 (0)1 41 86 10 48
valerie.labrune@seagate.com
Seagate Technology
Samantha Lehane +44 (0)20 8846 0708
samantha.lehane@text100.co.uk
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