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July 14, 1998

SEAGATE BEATS THE STREET WITH Q4 EPS

By CBR Staff Writer

Seagate Technology Inc has returned to profitability after two quarters in the red. The Scotts Valley, California company posted fourth-quarter net income down 62.7% at $22m on revenue down 20.3% at $1.58bn. For the year, net loss was $530m on revenue down 23.7% at $6.82bn, compared to net income of $658m, or $2.62 per share, last year. Earnings per share for the quarter came in at $0.09, down 60.9% from the year-ago quarter’s $0.23, but above the $0.06 that analysts surveyed by First Call were expecting. Gross margins for the quarter came in at 18.9%, down from 23.1% last year and fell from 22.6% to 14.5% for the year. The company shipped 6.8 million drives during the quarter, down from about 7.2 million in the previous quarter. It said that now 73% of its revenue is being derived from drives of 4 gigs or more, signaling its continuing move toward high-end products. It figures that desktop sales and margins won’t improve but the introduction of new products for the high end should offset that, leading to a prediction of slightly improved first-quarter revenue and a minimal improvement in margins. First Call is looking for $0.16 per share next time.

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