Seagate net jumps on laptops, consumer electronics

SAN FRANCISCO (Reuters) - Seagate Technology, the largest US hard-disk drive maker, on Tuesday posted quarterly profit five times earnings a year earlier amid growing demand for notebook computers and consumer electronics such as Microsoft upcoming Xbox 360 gaming console.

Revenue missed analysts' forecasts, but one analyst said its gross profit margin was better than expected.

"That shows you that their profitability is still intact," said analyst Shaw Wu of American Technology Research in San Francisco.

The company also said it plans to repurchase as much as US$400 million of stock, its first buyback since Seagate went public in 2002.

Net income for the fiscal first quarter ended 30 September rose to US$272 million, or 54 US cents per share, from US$54 million, or 11 US cents per share, in the year-earlier period, the company based in Scotts Valley, California said in a statement.

Revenue rose to US$2.09 billion from US$1.56 billion. Analysts on average forecast revenue of US$2.19 billion, according to Reuters Estimates.

Seagate has been profiting from booming sales of consumer electronics such as digital video recorders, global positioning satellite receivers and set-top boxes. Microsoft's Xbox 360, its latest-generation game console, is scheduled for release 22 November. Such devices have helped revive an industry that slumped as prices slumped amid excess supply.

"Healthy demand across all markets continues, with the most robust growth coming from the notebook and consumer electronics markets," chief executive Bill Watkins said in the statement.

Music players including Apple Computer's iPod also have been driving hard-disk sales, but Apple's latest music gadget, the iPod nano, uses flash memory instead of a hard-disk drive.

Seagate said it expects fiscal second quarter revenue of US$2.1 billion to US$2.2 billion and earnings per share of 48 US cents to 52 US cents, excluding expenses for non-cash stock-based pay. On a net basis, earnings per share should be 44 US cents to 48 US cents, Seagate said.

Analysts were expecting earnings per share of 55 US cents before one-time items in the second quarter, according to Reuters Estimates. They forecast revenue of US$2.28 billion.

Seagate's earnings adjusted for one-time items amounted to 52 US cents a share, missing estimates, Goldman Sachs analyst Laura Conigliaro wrote in an investor note after earnings were reported.

Seagate shares trade at 7.6 times fiscal 2006 estimated earnings, a discount to competitor Western Digital Corp's 9.9 multiple and Maxtor Corp's 15.3.

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