Seagate falls short of expectations

Storage maker Seagate comes up short in the fourth quarter thanks to legal costs and restructuring charges.

Storage maker Seagate Technology (SEG) posted weak gains across the board for the quarter as expected, but still missed expectations thanks to legal costs and restructuring charges.

Seagate stock closed at 39 1/16, up from yesterday's close of 37-3/4. The company announced earnings after the markets closed.

Seagate issued two earnings warnings this quarter, citing slow demand for its higher-end products. Seagate reported a net income of $59.3 million, or 23 cents a share, compared to a net income of $101 million, or 46 cents a share last year.

Wall Street analysts were expecting 66 cents a share, according to First Call. Analysts originally were expecting profits of 94 cents a share, but they revised estimates after the company warned last month of lower revenues.

During the quarter, Seagate incurred one-time charges of $153 million as a result of legal costs associated with a case brought by Amstrad PLC, which charged that the Scotts Valley, California, company sold it faulty disk drives, almost ruining its business. The company also took a $2.5 million charge in relation to the restructuring of the company's Seagate Software subsidiary.

Without these charges, and their related taxes, the fully diluted income per share for the quarter would have been 61 cents a share, still missing expectations.

Revenue also shrunk to $1.98 billion for its fourth quarter, down from $2 billion recorded for the same period a year ago.