Seagate blamed harsh competition across all sectors of its disk drive business and price squeezes at the desktop level for failing to meet Wall Street's expectations for its fiscal fourth quarter.
For the quarter, which ended 2 July, the storage provider turned in revenues of $1.64 billion, down from $1.81 billion a year ago.
Net profits were $102 billion or $4.11 per diluted share, after pre tax gains of $1.67 billion related to the sale of its network and storage management unit to Veritas in May. The pre tax gain was net of a related one time charge of $136 million. In the same period last year, Seagate turned in earnings of $22 million or $0.09.
Excluding the extraordinary items, however, Seagate saw net income rise to $69 million or $0.30 per share from $22 million or $0.09 per share a year ago. This fell below the First Call analysts' consensus estimate of $0.32 per share.
Steve Luczo, Seagate's president and chief executive, said the company's disk drive sales were "disappointing" because of the "competitive pricing environment as well as internal Seagate execution issues."
He continued: "There were flat revenues from the desktop and high end [disk drive] markets. The desktop is falling in price and we did not gain OEM marketshare - the pricing didn't make sense to Seagate. There was a shortfall at the high end due to mixed opportunity, internal execution issues and changes to the north American distribution channel."
He blamed Seagate for not having an "effective system" in place to counter the competitive price squeezes and subsequent demands made on it by customers. "We need better visibility in our products," he said, adding that the company has embarked on a six month programme to improve its supply chain.
But he added that although Seagate would continue selling large volumes of desktop and high end disk drives, revenues were expected to remain flat because of the "hostile pricing environment".
Veritas originally announced it was to acquire Seagate's network and storage management group last October for $1.6 billion. The idea was to create what it claims will be the largest independent storage management software company. Seagate pulled out of the semiconductor business at the same time.
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