Seagate Technology Inc, which warned last month of a fourth-quarter shortfall (CI No 3,184) posted net income that slid 42% to $59m, or $0.23 per share, on revenue down 2% at $1.98bn – just shy of the $2bn to $2.1bn it projected. Results for the quarter include a whopping $153m in charges related to the adverse judgment in the Amstrad Plc litigation (CI No 3,160) and $2.5m in charges from the restructuring of the Seagate Software subsidiary. Without the charges, earnings would have been $0.61, still short of the $0.66 to $0.78 that was expected, depending on who you asked. The company blames softened demand for high-end storage products and internal production problems for the poor Q4 performance. For the year, net income was $658m, or $2.61 per share on revenue up 4% at $8.94bn, up from net income of $213.3m last year. Charges aside, earnings for the year would have come in at $3.05, not far off First Call’s estimate of $3.09. And even as
the Amstrad mess may not be over yet (see Todays News), Seagate now faces problems with the Internal Revenue Service, who on June 30 sent the company a notice of potential deficiencies relative to the tax years 1991 through 1993. It seems the IRS is looking for about $38.5m plus interest, as well as about $5.7m in penalties. The company, however, believes it has meritorious defenses to the IRS adjustments and says that the likely outcome of the matter should have no material effect on its financial position.
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