Ireland-based computer hard disk maker Seagate Technology Plc (STX) Tuesday reported a sharp fall in profit for the third quarter, mainly due to lower revenues. Adjusted earnings missed market projections. Separately, the company agreed to buy Samsung Electronics Co. Ltd.'s (SSNLF.PK, SSNNF.PK) hard disk drive operations as part of a $1.38 billion cash and stock alliance, aiming to significantly expand its customer access in China and Southeast Asia.
For the third quarter, Seagate's net income plunged to $93 million or $0.21 per share from prior year's $518 million or $1.00 per share.
Adjusted net income for the quarter, which excluded loss on redemption of debt, purchased intangibles amortization, restructuring and tax adjustments related to prior fiscal years, was $113 million or $0.25 per share.
On average, 24 analysts polled by Thomson Reuters expected the company to earn $0.27 per share for the quarter. Analysts' estimates typically exclude special items.
Quarterly revenue, as announced on April 4, was $2.70 billion, lower than $3.05 billion a year ago, yet beat Wall Street analysts' consensus estimate of $2.66 billion.
During the quarter, the company shipped 49 million disk drives, and its gross margin was 19.1 percent.
Under Seagate's strategic deal with Samsung, announced today, Samsung's hard disk drive operations will be combined into Seagate, and the companies would extend the existing patent cross-license agreement. Samsung will provide its semiconductor products for use in Seagate's products under a NAND flash memory supply deal, while Seagate will supply disk drives to Samsung for PCs, notebooks and consumer electronics. The companies would also continue to co-develop enterprise storage solutions.
As part of the transactions, Samsung will receive consideration consisting of 50 percent Seagate ordinary shares and 50 percent cash. The cash portion would be $687.5 million, and Seagate ordinary shares will be valued at $687.5 million for 45.2 million shares, or about 9.6 percent ownership of Seagate.
The deal would be closed by the end of calendar year 2011, subject to customary closing conditions.
Under the agreement, Samsung will also have a right to designate a nominee to join Seagate's Board of Directors.
Seagate expects the deal to be meaningfully accretive to adjusted earnings per share and cash flow within the first full year following the closing.
The agreement has no financing contingencies. At the end of the fiscal third quarter, Seagate's cash, cash equivalents and short-term investments totaled approximately $2.5 billion.
While announcing a quarterly cash dividend of $0.18 per share in early April, Seagate chairman, president and Chief Executive Steve Luczo had said, "We will continue to evaluate a wide range of strategic uses for cash going forward."
In March, Seagate competitor Western Digital Corp. (WDC) agreed to acquire Hitachi Global Storage Technologies, a unit of Japanese electronics company Hitachi, Ltd. (HIT), for about $4.3 billion in cash and stock.
STX closed Monday's regular trading at $17.84, up $0.20 or 1.13 percent. In pre-market activity, shares further increased $0.22 or 1.23 percent to $18.06.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.