We are pleased with Maxtor’s first quarter performance, achieved during a very challenging period, not only for the hard disk drive industry, but for the technology sector as a whole, said Mike Cannon, president and CEO. Softening demand for PC systems affected the demand for hard drives and made inventory management especially critical. Despite the environment, Maxtor shipped 6.7 million hard drives during the first quarter and achieved a gross profit margin of 14.1%, largely the result of a favorable product mix and continued strong operational execution. Inventory was $110 million at the end of March and cash and marketable securities totaled $349 million at quarter-end.
We are extremely excited about the progress we’ve made in extending the use of Maxtor hard drives in the consumer electronics market. During the first quarter, we introduced the Maxtor 531DX, the first of a new family of simpler, smaller, highly reliable hard drives, ideal for use in entry PCs and consumer electronics applications. We were also pleased to announce recently that we have begun volume shipments of hard drives for use in the DISH Network advanced digital satellite television receivers manufactured by Echostar. DISH Network is the fastest growing satellite TV service provider in the US and the world’s largest provider of satellite set-top boxes. These accomplishments further establish Maxtor as a major participant in emerging consumer electronics applications.
The strength of our hard drive business was masked somewhat by our continued investments in building our network attached storage business. In the first quarter, the NAS business generated revenue of $4.3 million and a net loss of $(12.2) million. These results reflected in part a marketing strategy for transitioning to our new MaxAttach NAS 4100 introduced in early March. The MaxAttach NAS 4100 is a new, broadly interoperable and highly manageable NAS file server that is based on Microsoft Windows Powered software that we believe better serves the storage needs of IT managers. The alliance with Microsoft has significantly enhanced the features and functionality of our NAS products. We continue to believe that NAS represents a significant growth and profit opportunity for Maxtor and we remain committed to making the necessary investments to ensure our success in this emerging market.
On April 2, 2001, Maxtor completed its merger with Quantum Corporation’s Hard Disk Drive Group, a transaction that created the world’s largest hard disk drive company in terms of units shipped in 2000 and a leader in the delivery of storage solutions and technology. Combined revenues from Maxtor and Quantum HDD were approximately $6 billion in 2000.
SOURCE: COMPANY PRESS RELEASE
