Higher-Than-Expected Quarterly Revenues for Seagate

Seagate Technology announced an update to its expected financial results for its first fiscal quarter of 2010, which ends October 3, 2009.

Overall industry demand for hard disk drives continues to strengthen. As a result, the total available market (TAM) for the September quarter is anticipated to be greater than the 135-140 million units originally expected while the TAM for the December quarter is now projected to be 145-155 million units.

For its first fiscal quarter, Seagate now expects revenue to be at or slightly above the high end of its original guidance of $2.4-$2.6 billion. In the event OEM demand is stronger than we anticipate during the last two weeks of the quarter, as occurred last quarter, revenue for the first fiscal quarter could be greater than our revised guidance. As a result of our rapid transition to market leading notebook and desktop products, as well as improving factory efficiencies and utilization, gross margin as a percent of revenue is now expected to be approximately 23-24%.

Seagate believes disk drive inventory in all channels continues to be at appropriate levels, with supply in balance with demand.

The demand and pricing environment during the remaining weeks of the quarter will be key factors in determining the operating results for the first fiscal quarter of 2010.