Hard disk drive maker Seagate Technology PLC (STX), Tuesday reported a fourth quarter profit from a loss in the year-ago quarter, helped mainly by higher revenues and lower expenses. Nevertheless, earnings for the quarter missed Street views, as did revenues. The company said the over all slump in demand for storage devices impacted its sales, failing to meet the lower end of its sales expectations.
The Grand Cayman, the Cayman Islands-based company reported net income for the fourth quarter of $379.00 million or $0.76 per share, compared to a net loss of $83.00 million or $0.17 per share in the year-ago quarter.
On average, twenty-three analysts polled by Thomson Reuters expected the company to earn $0.77 per share for the quarter. Analysts estimates typically exclude special items.
Results for the quarter included $6 million of purchased intangibles amortization expense, $16 million of restructuring charges, $3 million expense for the May 2010 termination of Seagate's revolving credit facility.
The charges and expenses were more than offset by a $6 million recovery of previously impaired long-lived assets and a $50 million income tax benefit due principally to valuation allowance adjustments related to deferred tax assets.
These aggregate impact of these items was a $31 million increase to net income or approximately $0.06 per share.
Revenues for the quarter increased to $2.66 billion from $2.35 billion in the prior-year quarter. Twenty-four analysts had a revenue consensus of $2.85 billion for the quarter.
In the immediately preceding third quarter, the world's largest disk drive maker reported a turn to profit from the year-ago hefty loss, boosted by strong revenue growth and improved margins. The company reported net income for the second quarter of $518 million or $1.00 per share, on revenues of $3.05 billion.
Total operating expenses for the fourth quarter eased to $2.28 billion from $2.36 billion last year, due to lower restructuring and other expenses which totaled $16 million, compared to $84 million in the year-ago quarter, as well as lower cost of revenue for the quarter under review.
The company noted that the seasonal impact on the demand for storage devices and unfavorable pricing affected its sales. Further, the industry demand in the fourth quarter was at the low end of the company's expectations due primarily to issues emanating from the debt crisis in Europe and slowing consumer spending especially in the U.S. and Europe.
For the full year, Seagate's net income was $1.61 billion or $3.14 per share, compared to a net loss of $3.13 billion or $6.40 per share in fiscal 2009.
The company's revenue for fiscal year 2010 totaled $11.40 billion, up from $9.81 billion in fiscal year 2009.
Analysts were looking for earnings of $3.43 per share, on revenues of $11.60 billion for fiscal 2010.
Seagate shares, which have traded in a range of $10.72 to $21.58 over the past year, closed Tuesday's regular trading at $14.53, up $0.26 or 1.82%, on a volume of 14.02 million shares. However, the sock lost $0.21 or 1.45%, trading at $14.30 in after hours.
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