Disk maker Seagate saw profits fall in the second quarter ended 29 December 2006 despite growing sales.

Costs relating to the acquisition of Maxtor pushed profits down more than 50 per cent.

The company spent $76m directly on the acquisition, but said it was successfully shifting Maxtor customers to "more cost-effective, higher margin Seagate products".

In the run up to Christmas the firm sold seven million disc drives for consumer products.

Looking forward, Seagate predicts a further increase in profitability in the traditionally slower second half of the year.

For fiscal 2007 it predicts revenues of between $11.5bn and $11.7bn and non-GAAP diluted earnings per share of $1.70 and $1.75.

The company will pay a quarterly dividend of 10 cents per share on or before 16 February.

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