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Seagate sinks after missing lowered expectations

    Seagate Technologies (NYSE: SEG) stumbled Friday after the company lowered the bar for itself, but still couldn't hit its earnings target. Meanwhile, the company is seeing rough seas ahead.

    Shares fell 2 3/4 to 27 1/4 at market open from a 52 week high of 44 1/4.

    The top maker of computer disk-drives reported earnings $69 million, or 30 cents a share, in its fourth quarter. The results were 4 cents below analysts' expectations. Seagate also announced it was reviewing global operations and said profits would be hard to come by in the September quarter.

    On June 29, Seagate warned profit would fall to between 32 and 37 cents a share due to weak demand for its drives and falling prices. At the time, the firm had been expected to earn 49 cents a share by First Call.

    Morgan Stanley Dean Witter said Friday added to Seagate's woes by announcing Friday it would started coverage of Seagate with a "neutral" rating. Eight out of 15 analysts covering the stock still rate it a "moderate buy," while 4 put it at a "strong buy" according to Zachs Investment Research.

    Seagate was only one of many disk drive companies that have warned of disappointments for the quarter. It remains a leader amid in the industry. On June 3, Quantum Corp. (Nasdaq:QNTM), said results would be lower than forecasts because of a drop in prices, spurred by the popularity of cheaper personal computers and fierce competition.

    "Given the pricing environment that we exited the June quarter at, it would be very difficult to be profitable during the September quarter," said Seagate chief financial officer Charles Pope in a conference call.

    He said Seagate could be close to breakeven in the December quarter. "It would be difficult, but I think that that is attainable,'' Pope said. He added: "We would anticipate being profitable for the entire fiscal year ending in June.''

    In its review of worldwide operations aimed to improve efficiency, Pope said Seagate would likely stay committed to Asia because of the expertise available to it in the region. He also forsees a change in the mix of employees away from direct labor to those with more technical and engineering skills, and several other restructuring moves in Asia.

    Reuters contributed to this report.