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Seagate income soars with $359m tax break

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Seagate posted a boost in fourth quarter income thanks to higher revenue and a one-time tax benefit.

Income for the largest US hard-drive manufacturer rose to $541m, compared to $7m a year earlier. Revenue increased about 9 per cent to $2.74bn, up from $2.53bn the same quarter the previous year.

Seagate's income rose sharply with a $359m tax benefit, which helped offset a $28m bill for ongoing restructuring and a $4m write-off of an equity investment.

In April, Seagate had lowered its revenue expectations to $2.8bn for the quarter. The company blamed the shortfall on aggressive pricing competition and lower-than-expected demand for high capacity 3.5-inch ATA disk drives.

For the fiscal year, Seagate earned $914m, a 9 per cent bump from $850m in '06. Revenue for the year was $11.4bn. That's a 23 per cent jump from last year's fiscal revenue of $9.2bn.

“Our results for the year as a whole as well as for this quarter demonstrate the continued strength of the digital storage industry and the positive impact of several important strategic steps we have taken to secure and extend our industry leadership,” said Seagate CEO, Bill Watkins in a statement.

Looking ahead, the company expects first quarter revenue to be between $2.9bn and $3bn. Watkins said during a quarterly investor conference call that he sees a robust demand for storage and is confident Seagate will be able to capitalize on the opportunity.

During the fiscal year, Seagate completed the integration of Maxtor, which it announced in late 2005. Despite the buyout, Maxtor remains a separate brand on store shelves. ®

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