Seagate CEO cops to sloppy floppy in Q4

Seagate says the storage market is chugging along just fine, but the company's late-mover position in notebook and nearline markets made for a disappointing fourth quarter.

"The real issue here is we've been sloppy on product execution," said Seagate CEO Bill Watkins, during an earnings conference call. "We've been sloppy on qualifications, and we've been sloppy on how we are doing our spending — and that solely rests on me and the management team, and this is in our control. We have a plan."

For the June quarter, Seagate's revenue was $2.89bn, up about 5.6 per cent from $2.74bn in the same quarter last year.

But Q4 profit took a 70 per cent dive. Net income was $160m, compared to $541m in the same period a year ago. The year ago quarter was boosted by a $370m tax benefit.

Forget that tax shift though because all Seagate could talk about were its product woes.

Seagate blames part of its lackluster results on the residual effects of not paying enough attention to notebook and nearline markets, allowing rivals such as Western Digital to gain an advantage.

"We focused considerable effort over the past few quarters successfully getting our product execution back on track, particularly in the notebook arena where we have lost some of the first mover advantage we have historically enjoyed," said Watkins. "We have confidence in our plan and we believe that we will grow revenue and improve earnings throughout the remainder of fiscal year 2009."

The company says for the September quarter, it expects revenue of $3.15bn to $3.3bn. Margins will narrow to 18 per cent in Q1 compared to 24 per cent in the previous quarter.

Investors didn't take kindly to the report, dropping shares about 15.5 per cent at the close of market. Share prices leveled back to normal in after-hours trading. ®