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Maxtor back in the black

Sales shift to SCSI drives up margins, ASP

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Maxtor today reported quarterly income of $9.4m (four cents a share) on sales of $925m, marking a return to profitability for the hard disk maker.

Q2 FY2005 revenues were up 13.1 per cent year on year, from $818m in the year ago, but down 13.6 per cent on the previous quarter's $10.7bn.

Despite the higher revenue in Q1, Maxtor lost $24.2m (ten cents a share), as the company was pushed into the red by the cost of hundreds of layoffs and of abandoning a 2.5in notebook-oriented drive development programme and of layoffs.

During the most recently completed quarter, Maxtor shipped 12.1m units, down from Q1's 14.2m. Crucially, it shipped 20 per cent more enterprise-class products - 926,000 units - and a "richer mix" of the SCSI drives into the bargain. That helped push the company's average selling price up sequentially from $75 to $77. Gross margin rose to 13.2 per cent from 10.9 per cent in the first quarter.

Maxtor shipped 11.1m desktop drives, down from 13.4m in the previous quarter, with more than 1.06m going into consumer electronics kit, up from 1.03m in Q1.

Maxtor CEO CS Park said the company would continue to focus on its recovery plan during Q3, including the transfer of the bulk of desktop drive manufacturing to China. ®

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