Dear Shareholders,

During fiscal year 2007, Seagate again strengthened its position by providing the storage solutions that serve the world’s growing desire to create, store, share and protect digital content. Unit shipments grew by 34% to a record 159 million disc drives and revenue increased by 23% to $11.4 billion – also a record. Profitability was less than planned resulting from a more aggressive pricing environment as industry participants were focused on market share gains at the expense of profits.

The ability to significantly grow revenue and unit shipments is testament to our long-held strategy of platforming technology and manufacturing, and vertical integration of critical components – particularly recording heads and media. Additionally, a very well executed transition to a new recording technology -- perpendicular magnetic recording -- further differentiated Seagate from the rest of the industry.

Seagate’s continued leadership is underpinned by our people, our values, and our culture, including an ongoing commitment to being a responsible global citizen. Our company spans many countries and cultures, yet at its core it is one community based on shared goals and values that guide our conduct and define our operations. As part of our global citizenship program, Seagate has taken action on one of the planet’s most pressing problems – climate change – by reducing the electricity (kilowatt hours) used per hard drive built in our manufacturing operations by 17%, exceeding our internal targets.  We have adopted the Electronics Industry Code of Conduct (EICC), and passed this code down to our suppliers worldwide, requiring them to implement programs to meet the EICC's requirements.

In fiscal 2007, Seagate also continued its membership in and support of the United Nations Global Compact (UNGC) and its principles. And our corporate giving programs continue to support the local communities where our employees live and work, with an emphasis on science, technology and math education. Being a good global citizen is a priority for Seagate, and one that we believe enhances shareholder value over the long term, especially as we evolve into an increasingly consumer-facing company.

We are excited about the opportunities that lie ahead for Seagate. Our optimism is based on the fact that, “You”, the consumer, are the catalyst behind the global growth of digital content. In the United States today it is estimated that almost half of all video content on the internet is user generated, and there are approximately 70 million blogs in existence around the world and another 120,000 new blogs are created every day. For the past two years, the hard disc drive industry has shipped more storage into homes than into commercial enterprises. In the home, digital content is not just resident in a desktop computer, but resides in digital video recorders, gaming platforms, handheld devices and external storage devices. The pace of change continues to be substantial, and the effects on the storage industry have been positive.

Storage is at the core of everything digital. Storage products and applications have broadened to include hard disc drives, flash memory, hybrid hard drives, solid state drives, and new ways to keep your digital content safe and secure. Seagate has the underlying technology, product manufacturing and customer relationships, to continue meeting the growing demand for storage products and solutions our digital world requires.

Looking forward to the coming fiscal year, we see strong demand for our products and expect to grow revenue and profitability to levels which will again demonstrate that Seagate is one of the best performing large companies in the technology industry.

Sincerely,