Bill Watkins – President, Chief Executive Officer, Director Brian Dexheimer – President, Consumer Solutions Division Dave Wickersham – President, Chief Operating Officer Charles Pope – Chief Financial Officer, Executive Vice President

Rich Kugele – Needham & Company Mark Moskowitz – J.P. Morgan David Bailey – Goldman Sachs Katy Huberty – Morgan Stanley Paul Mansky – Citigroup Shebly Seyrafi – Caris & Company Keith Bachman – BMO Capital Markets Andrew Neff – Bear Stearns Shaw Wu – American Technology Research Mark Miller – Brean Murray, Carret & Co. Christian Schwab – Craig-Hallum Capital Jayson Noland – Robert W. Baird

Welcome to the Seagate Technology’s fiscal third quarter 2008 financial results conference call. (Operator instructions). This conference call contains forward-looking statements, including but not limited to statements related to the company’s future financial performance. These forward looking statements are based on information available to the Seagate as of the date of this conference call but are subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated by these forward looking statements. Information concerning additional factors that could cause results to differ materially from those projected in the forward looking statements is contained in the company’s annual report on Form 10K as filed with the U.S. Securities and Exchange Commission on August 27, 2007 and in the company’s quarterly on Form 10-Q as filed with the U.S. Securities and Exchange Commission on January 30, 2008. These forward looking statements should not be relied upon as representing the company’s views as of any subsequent date and Seagate undertakes no obligation to undertake any forward looking statements to reflect events or circumstances after the date they were made. I would now like to turn the conference over to our host, Mr. Bill Watkins, CEO.

On the phone with me is Dave Wickersham, our President and Chief Operating Officer; Charles Pope, Executive Vice President and Chief Financial Officer; and Brian Dexheimer, President of our newly formed Consumer Solutions Division. As announced earlier in the quarter we have established a consumer solutions division to focus solely on making Seagate a leader in the home storage market. As we had stated at that time, we are very bullish about the long-term growth opportunity for home storage. Moving forward, Brian will be dedicating 100% of his efforts to achieving Seagate’s aggressive goals in this area. Next I’d like to start this afternoon’s call by sharing some perspective on the third quarter and providing some context on our fourth quarter outlook. I will then turn the call over to Brian, Dave and finally Charles who will cover in more detail our market, operating and financial results for the third quarter. Our results for the third quarter continue to demonstrate that this is a great time to be a leader in the storage industry. Seagate experienced solid year over year revenue and earnings growth. For the quarter, revenue increased 10% year over year to $3.1 billion, shipping approximately 8% more than we did in the third quarter of last year. Net income grew 62% year over year to $344 million. In the first nine months of fiscal year 2008, we reported over $1 billion in net income. During the back half of March there was a steep decline in the demand for personal storage products, followed by what we believe were strong incentives from our competitors. These developments within the context of our ongoing commitment to maintaining financial discipline resulted in revenues below our expectations. As I mentioned to you in January, our model is a powerful generator of cash which we have increasingly returned to our stock shareholders. I am pleased to report that the free cash flow for the quarter was approximately $390 million, bringing our nine-month fiscal period free cash total to approximately $1.5 billion. Most recently the Board’s commitment to returning value to the shareholders was demonstrated in February by an increase in the quarterly dividend from $0.10 per share to $0.12 per share and an additional authorization to repurchase up to $2.5 billion in outstanding common shares over the next two years. With that, let me turn the call over to Brian.

As we have previously outlined in our mid-quarter update, we expected March to be a key month in determining the outcome for the quarter. While we anticipated typically strong industry demand for the month of March, in fact we experienced an unexpected drop in demand for 3.5-inch ATA products in the last couple of weeks. As a result, while year over year industry growth for the quarter was nearly 9%, the month of March year over year comparisons in the space were actually flat. We believe market concerns with macro-economic pressures contributed to the change in hard drive demand as it was concentrated mostly in the US channel in retail markets. The impact of these concerns ultimately led to our revenue number coming in below our expectations. That said, year over year comparisons confirmed growth trends for digital storage remained strong as the digital universe continues to expand. We believe the overall industry total available market for the March quarter was approximately 131 million units, up 16% year over year but down 9% quarter-over-quarter, which was lower than our previous expectations. Seagate shipped 43 million units in the quarter, up 8% year over year. We believe that this less than market growth rate is specifically driven by our performance in 2.5-inch ATA products which I’ll address later. Overall demand visibility for the quarter and the June quarter is limited as our customers continued to assess the impact the current economy will have on their own businesses. Consequently we expected overall TAM to be down 5% quarter over quarter to 120 to 125 million units. This represents 8-12% year over year growth. In the mission critical enterprise space, the TAM in the March quarter was within our expectations and remained strong at approximately 8.3 million units, representing 15% year on year growth. Seagate grew its leadership position in this market with shipments of 5.3 million units during the quarter. Seagate’s small form factor enterprise drives continued to be in high demand as data centers look to reduce energy consumption without compromising capacity or performance. Seagate products are at the forefront of this growing trend. During the March quarter 1.8 million or 34% of Seagate’s enterprise drive shipments were 2.5-inch form factor. As we have mentioned the last few quarters, the build out of web 2.0 data centers and replacement of tape solutions with drive-to-drive backup solutions are driving growth for high capacity enterprise class SATA products. We saw continued growth for these applications in the March quarter with year on year growth doubling as Seagate increased its leadership position. Looking forward to the June quarter, we expect the overall enterprise demand to be slightly down seasonally. The TAM in the desktop compute market decreased 9% sequentially to approximately 62 million units. Seagate shipped an industry leading 27 million units during the quarter. This market continued to trend toward higher capacity drives during the March quarter. Our shipments also moved in this direction with the sales of 1 terabit barracuda drives reaching nearly 0.5 million units during the quarter. As a result, Seagate continued to drive technology leadership in this space with a higher than average share representation in products greater than 320 gigabits. For the June quarter we expect the desktop compute TAM to be seasonally down. And consumer electronics applications, we believe the industry TAM was about 18 million units, down 23% sequentially. The seasonal decline in this market was driven by expected lower shipments in personal media players and gaming applications. Seagate maintained its leadership position by shipping 5.1 million units, down sequentially primarily as the result of seasonal demand for gaming drives. DDR penetration continued globally with industry TAM growing 25% year on year. In the DDR our pipeline HD series of products began qualification during the quarter and we have received excellent customer feedback regarding market leading performance attributes important to this application. We expect the CE market will continue to experience lower seasonal demand in the June quarter. With regards to the mobile compute market, the TAM grew 41% year over year to 42 million units. Seagate shipped 5.5 million units into this market during the quarter, an increase of 18% year on year. As I stated earlier, 2.5-inch products are the single driver of our current gap to market growth rate. We’re not pleased with our performance or position in this market and are very focused on improving our results in all 2.5-inch products during the calendar year. During the March quarter we moved forward in this direction with the ramp to full volume of our 250-gigabit product. In addition, we’ve begun shipments of qualification units of our 320-gigabit product and expect volume production to commence during the June quarter. We have successfully engaged customers in the notebook and retail markets for these product offerings and expect to begin to see positive results from our efforts in the June quarter. We expect the June quarter for the mobile compute market to exhibit normal seasonality and be down from the March quarter. In our branded solutions business, our focus in the March quarter was on improving our supply chain and go to market execution. We were successful in fulfilling all partner supply requirements through the quarter and introducing important new capacity points in both brands to position for more complete market participation going forward. In addition, we have realigned marketing programs with key channel partners in North America during the quarter to better position our product offerings and improve demand generation. We believe all these activities will improve short-term execution beginning in the June quarter. As we look forward we remain optimistic about the opportunity for storage in the home and we will continue to focus on improving execution innovation across our offerings. Now I’d like to turn the call over to Dave to provide an update on our operations.

Thanks Brian. Three topics I would like to cover with you today, inventory, capital and new products. Seagate’s inventory increased $243 million quarter-over-quarter from $830 million to $1.07 billion and inventory turns were 8.5 in the March quarter. The softening in demand we experienced for 3.5-inch ATA products during the last couple weeks of the quarter was the primary cause of reduced inventory turns as finished goods increased $194 million. Raw materials also increased by $54 million resulting from strategic purchases of external components. Although we have since adjusted our bill plans to consume excess finished goods this quarter, we plan to maintain some finished goods at the end of June to decrease freight costs by utilizing ocean shipments. Consequently, we expect inventory turns to be approximately nine for the June quarter. In regards to fiscal 2008 capital investment, there is no change to the outlook of approximately $900 million. As you know a large portion of our fiscal 2008 capital investment is for the expansion of our fixed media and substrate factories in Asia. Looking out to fiscal 2009, we expect the mix of our capital investment to move back to the traditional split of approximately one-third for media, one-third for heads and one-third for drive assembly and test. As discussed in previous calls, we are committed to ensuring our manufacturing capacity aligns with customer demand and will continue to manage our capital investments accordingly. We are currently evaluating our requirements for the seasonal growth in the September and December quarters and will finalize our fiscal 2009 plan this quarter and will update you in July regarding our fiscal 2009 capital investments. At this point in time we anticipate a modest increase in our capital investment year over year. In the notebook market we continued to make progress qualifying and ramping the new high capacity products. As this market moves rapidly to higher capacity points, our execution in ramping notebook new products is critical to our success. As planned the 250-gigabit product shipped in volume during the March quarter. Additionally we began the initial shipments of the 320-gigabit product in the March quarter and we expect to ramp this product to volume throughout the June quarter. For the desktop market, our new products continued to experience broad customer adoption. We were the leader in bringing to market the 250-gigabit per disk products and this products family continues to be very cost effective. Demand for our 1-terabit product was strong as its 7200-RPM performance differentiated it from competitive offerings. And in the March quarter we began volume shipment of our 320-gigabit per disk ATA product family. The success we have had in the mission critical enterprise market is directly related to our ability to deliver leading product technology capacity form factor performance and interface to our customers over a sustained period of time. Customers continue to drive changes in this market as the mix continues to evolve to 3.5-inch 15,000-RPM products, 2.5-inch 10K RPM products and SAS interfaces. To strengthen our leadership position we recently brought to market a number of product offerings. First qualification of our 15,000 RPM 450 gigabit product are in progress and volume is expected to ramp in the June quarter. Secondly, last week we announced the first self-encrypting drive which offers the best solution for protecting data at rest. Hard drives where sensitive information are being decommissioned and removed from the data center on a daily basis and this technology enables data center managers to rest assured the data is secure and not accessible to unauthorized users. And lastly we announced the shipment of the industry’s first 1-terabit product with a SAS interface. The SAS interface provides Seagate’s customers with enhanced data pass integrity, error detection and correction, better performance and a simpler integration process. Now I would like to turn the call over to Charles.

You will find the company’s press release, 8-K and additional financial information related to Seagate’s financial performance along with a reconciliation of GAAP to non-GAAP financial results and other supplemental information in the investor relations section of Seagate’s website at Seagate.com. For the March quarter Seagate reported revenue of $3.1 billion and unit shipments of approximately 43 million which reflect year over year growth of 10% and 8% respectively. In the final two weeks of the March quarter, demand for 3.5-inch ATA products weakened particularly in the distribution channel. Seagate stayed focused on maintaining supply demand balance in the distribution channel and ended the quarter with 4.4 weeks of inventory on hand in the channel using a four week average. Our focus continues to be optimizing profitability and cash flow without retreating on our market share. GAAP net income and diluted earnings per share for the March quarter are $344 million and $0.65 respectively. Included in the GAAP results are approximately $29 million of purchased intangibles amortization and other charges associated with recently completed acquisitions as well as a net gain from asset sales of $4 million. Without these items and the associated tax effects, non-GAAP net income and diluted earnings per share was $369 million and $0.70 respectively. Included in both the GAAP and non-GAAP results is approximately $20 million of restructuring and other non-operating charges which reduced diluted earnings per share by about $0.04. For the first nine months of fiscal 2008, we reported revenue of $9.8 billion, up 14% year over year. Net income and diluted earnings per share on a non-GAAP basis are up in excess of 9% year over year. Cash generation continues to be strong with cash provided by operations of $2.1 billion and free cash flow defined as net cash provided by operating activities less capital expenditures of $1.5 billion. During the course of fiscal 2008, Seagate has returned approximately $1.44 billion of cash to its shareholders consisting of approximately $159 million through quarterly dividends and approximately $1.28 billion of share repurchases. GAAP gross margin for the March quarter was 26.3%, excluding approximately $12 million of acquisition related costs, non-GAAP gross margin was 26.7%. Gross margin increased approximately 30 basis points from the prior quarter due primarily to a favorable mix of products within specific markets and across markets. GAAP R&D and SG&A costs were $418 million for the March quarter. Excluding costs related to recent acquisitions, non-GAAP expenses were $416 million, lower than what we had expected by about $20 million due mainly to lower compensation related costs primarily from slower than planned hiring and favorable depreciation expense due to the push out of capital investments. Slide 6 has the detail for the adjustments made to GAAP R&D and SG&A for the March quarter. Cash flow from operations was $665 million for the March quarter while free cash flow was $390 million. Cash, cash equivalents and marketable securities ended the quarter at $1.28 billion, down $467 million from the previous quarter. During the March quarter, Seagate returned approximately $836 million of cash to its shareholders consisting of approximately $52 million of the quarterly dividend and $784 million of share repurchase. Capital investment in the March quarter was $275 million and for the first nine months totaled $637 million. As Dave previously indicated, we continue to plan for approximately $900 million of capital investment for fiscal 2008. Depreciation and amortization for the March quarter was $211 million, down slightly from the prior quarter. Amortization of purchased intangibles totaled approximately $26 million. During the March quarter the company took delivery of 36 million shares related to its share repurchase plan with an average price of $21.79. This was previously disclosed on March 4. We put in place a 10B51 plan that allows the company to repurchase shares during periods it would normally be locked out of the market. Utilizing this plan, as of April 14, the company has repurchases approximately 9.1 million shares at an average share price of $21.36. The company has authorization to purchase approximately $2 billion of additional shares under the current stock repurchase program. Now I’ll provide some further detail on our outlook for the June quarter. As Brian mentioned, visibility into the June quarter is limited as macro-economic situation which impacted 3.5-inch ATA demand at the end of the March quarter, this makes providing an outlook all the more difficult. With that said, for the June quarter we are expecting industry unit demand to fall below normal seasonal patterns which are typically down around 5%. Like for like price declines are typically more aggressive in the June quarter as compared to the March quarter. We expect this to hold true and have modeled price declines to be near the upper end of the 4% to 7% range. Consequently, Seagate expects revenue to be in the range of $2.85 billion to $3 billion. GAAP diluted earnings per share is expected to be $0.37 to $0.41 and includes approximately $21 million of purchased intangible amortization and other charges associated with the recently completed acquisitions. Accordingly, non-GAAP diluted earnings per share excluding acquisition related costs are expected to be $0.41 to $0.45. R&D and SG&A expenses are expected to be relatively flat as compared to the March quarter. Other income and expense is expected to be a net expense of approximately $20 million and the tax rate is expected to be approximately 5%. As always this outlook does not include the impact of any future acquisitions, stock repurchases or restructuring activities the company may undertake during the quarter. That concludes my remarks; I will now turn the call back over to Bill.

On behalf of the management team I’d like to thank our employees around the world for their continued dedication to making Seagate the leading storage solutions company in the world. So with that let’s open up for questions.

(Operator instructions) Your first question comes from the line of Rich Kugele - Needham & Company. Rich Kugele – Needham & Company: On the notebook side, how much of the market do you actually think is tied to the 320 gig today or even the 250 that perhaps you didn’t completely serve in the March quarter, to understand better on how much of the market opportunity you actually didn’t have on the table and will have on the table in the second half of the year.

I think our best estimations are on the March quarter that a combination of products that are 250 and above in the 2.5-inch space were on the order of 20-25% of the total TAM. So if you want to look at it from that perspective we only really participated during the full quarter in about 70-75% of the TAM. Rich Kugele – Needham & Company: And then in terms of 2008 as a whole, do you still expect the, well I guess what is your industry expectation for units and then do you think that you’ll then have to exceed that level to regain share on the notebooks and are you putting in place then the capacity there Dave for that type of a level or should we just assume that you’ll gain share really in 09?

First on notebooks specifically as Brian mentioned in his commentary, we have worked with our OEMs on the ramps last quarter, the 250 gig products. So on that one we do in fact think that we will have some modest opportunity as we look into the June quarter. So we expect to see that. And I think as Charles indicated earlier, another area is our plan is to pretty much hold our share. So that’s what we factored into both our capacity plans now and we’re not talking pretty much about FY09 at this point in time. But you could assume that similar thought process as we look at FY09.

And your next question comes from the line of Mark Moskowitz - J.P. Morgan. Mark Moskowitz – J.P. Morgan: Can you talk a little more about just this visibility issue in terms of looking out to June Charles or Bill, you mentioned the macro had an impact on the 3.5 inch ATA demand, just kind of curious how much of that really is macro versus market share? Because if it really is a macro wouldn’t most of your segments have exhibited some sort of southern decline or V shaped decline?

Mark, here’s my explanation for it, because in contrast we haven’t seen the enterprise market for instance slow down and we’ve been watchful for several months on that because there’s a traditional wisdom that might say that that would be the first place you’d see a macro-economic effect. The reality is that it appears the data center storage is still in the [parado] of data center expenses still relatively high and I think there’s some third party information out there that would support that. So we’re not seeing it there, where we’re seeing it is in places that seem to be a little more transient in terms of purchases and I would put the client in that space, so either the notebook or the desktop. And so I think that’s the place where certainly commercial organizations and arguably consumers have more flexibility on delaying or eliminating purchases because those tend to be a little bit more transient in terms of purchase behavior. And in fact that’s exactly where we saw the last couple weeks of March end up where we saw those transient kinds of products freeze up to some degree and we really saw that in the markets that were in the channels that were more transactional, i.e. retail and US distribution. So I think all that kind of fits together, it makes sense to me why you’d see it there and maybe not in some other places. Now the real question I think as we go forward and this relates to visibility, is adapting into spread both regionally and then up the food chain if you will with the less transient types of items. Mark Moskowitz – J.P. Morgan: You talked about the opportunity in the 250-gigabit notebook going forward, just wanted to get a sense in terms of, sounds like the products there; the yields are there, what about the OEM reception? Is there a place for Seagate early on or do you have to wait until the market grows, to get a seat, how should we think about the OEMs dolling out that business versus some of your peers?

As I indicated to Rich’s question earlier, I think as far as the 250 capacity points, mentioned the qualifications are largely complete, that’s behind us and the modest share growth that I talked to is underpinned and our customers like Seagate, the value we bring, so admittedly we were late to the party but we are very confident, we have great relationships and great product breadth and we’re bringing value to those customers. So those are underpinned. And as we go forward as we frankly catch up on the 320-gigabit notebook product we would expect a similar opportunity. Mark Moskowitz – J.P. Morgan: Charles, I wanted to ask you a question as far as the gross margin outlook, can you give us some swing factors in terms of what type of range we should be expecting for gross margin going into the June quarter and how much of it is really mix driven versus changing dynamics in terms of price?

Okay, the math that you will apply to the numbers that we’ve given you will come out with gross margins being roughly 23%. And how that translates is as stated we think that like price erosions towards the higher end of the typical range, it’s not at 7% but it’s pushing towards that range and we are often times able to offset the price erosion by either reduced product costs as we introduce new products or by mixing to higher performance higher capacity products. That offset this quarter is only between 1.5-2% and so we are seeing some margin compression during the June quarter as a result of the mix of product that we are shipping and that’s both mix within a given market that we serve and then to a certain extent also across the market.

Your next question comes from the line of David Bailey - Goldman Sachs. David Bailey – Goldman Sachs: I was just trying to get a comment on the downturn that happened in the last two weeks of March. Have you seen that continue into the month of April so far and did you see any slowing on the OEM side as well or was it constrained just to the channel?

No we didn’t see any slowdown necessarily on the OEM side. To answer your question about what we’ve seen so far this quarter, in the context of a market that we expect to be down 5%, it seems like things are okay relative to that trajectory at this point. David Bailey – Goldman Sachs: Okay and then just a quick clarification, did you say in one of the earlier questions that 2.5 also saw some slowness or is it only the 3.5 inch?

It was most pronounced in 3.5-inch. David Bailey – Goldman Sachs: Okay but there was some on the 2.5-inch side as well?

Yes a little bit. David Bailey – Goldman Sachs: Do you expect any restructuring charge in the June quarter?

At this moment in time I don’t know off the top of my head David, I don’t anticipate any but I would need to look at that.

Your next question comes from the line of Katy Huberty - Morgan Stanley. Katy Huberty – Morgan Stanley: On the enterprise business first, some of your competitors are catching up on the quality and product cycle front, do you think you can sustain the above trend line market share that you’ve seen in the last couple of quarters?

The short answer is yes. As I mentioned before we continue to offer a number of new products and features that our customers need and we’re confident that we can attain share given our current position. Katy Huberty – Morgan Stanley: And then with the plans to ocean ship more product in June would you expect to see any difference in the timing of the September quarter demand spike?

No, I mean it’s the same increase in seasonality you know July will be strong, we want to use that to our advantage actually to position product in front of that July increase as well as get the oceans savings but no, nothing abnormal this September quarter that we’ve seen in the past.

Your next question comes from the line of Paul Mansky - Citi. Paul Mansky – Citigroup: Just as we kind of look in the back half of the year, obviously there’s a pretty big as it relates to some of your comments around how you’re balancing out the capital additions, clearly there’s a pretty big holiday build tied up in September. As we sit here today, how are you approaching that, what’s your expectations or how are you approaching that consumer build?

What we’re seeing is a 10-15% year over year in the September build and what we will do is we will position some inventory as indicated before in advance of that and as I mentioned from a capital perspective we’ll make some of those investments in the June quarter. But we’re going to continue to look very closely at the linearity, more at the peak in December and the peak in September. Last year I should say we were extremely conservative coming into this, we’re going to continue to be very mindful of our capital investments and not invest any dollar before we need to. So frankly I don’t see approaching this September December seasonality and increase in requirements much different than last year. So again we’re being very mindful, I think we’ve got the lead times relationships the processes in place to defer capital investment as long as possible. And to the extent we can do that, we’ll do that again this year. Paul Mansky – Citigroup: And just by way of a quick follow up, I heard you say 4.4 weeks I believe for Seagate, can you take a stab on where you think the industry level inventory sits in the channel?

Nearly 6. 5.8.

Your next question comes from the line of Shebly Seyrafi - Caris & Company. Shebly Seyrafi – Caris & Company: So assuming that the like for like price declines track more normally than the back half of calendar 08, what kind of lift to gross margins do you see from 23% in June say by the end of the year?

We’ve indicated that we expect our long-term range to be 21-25, we’re operating above that at this point in time but in reality until we go through our fiscal year planning and are able to look at what kind of mix and what kind of environment we’re operating in, I wouldn’t have a good speculation at this point. Shebly Seyrafi – Caris & Company: Is it fair to say it will increase though from current levels considering that seasonality is usually positive in the back half? Countering that of course is this recessionary environment we’re in and additionally can you also comment on your thoughts on demand for PCs, whether you think that that’s slowing down and that’s perhaps impacting your forecast?

Again we’re looking at a March quarter that was 10% up from a year ago and we’re looking at a June forecast that’s 10% up from a year ago. So again we think these trends, whether there’s a recession, these are still 10% growth and as we look at it we think the market will continue to have double-digit growth and we’re going to participate in that. We obviously don’t think we’re going to grow at faster than the market per se but we think the market has very decent growth to it and again we’re looking at, as much as you want to look at the forecast these are still 10% year on year. We’d expect September to be the same or better and December and so again we’re kind of planning that way and we see all indications from our customers that would support that.

Your next question comes from the line of Keith Bachman - Bank of Montreal. Keith Bachman – BMO Capital Markets: To follow up on the notebooks, as you think about the 25% of your TAM that you can now fulfill, more specifically do you have to use price to garner the attention of the OEMs or how is that share shift going to unfold do you think?

As I said, the short answer is no, we won’t do it with price we’ll do it with the products and the total package that we bring to our OEMs and our customers who are used to using Seagate’s [asset] portfolio. So I would say the disadvantage we have is as Brian indicated we were locked out of 20-25% of the TAM and so that doesn’t mean that we didn’t continue to work with those customers as we normally do on the balance of the Tam that we did have access to. So I don’t see us being disadvantaged. The key of course is that we hit the [qual slots]. And again that’s where we were disadvantaged and again we’ve got to make up for that and ensure that going forward we hit the customer’s [qual slots]. But barring that situation, we do expect that the, or normal engagements with our OEM customers.

Just to clarify though Keith, we will not have access to 100% of the TAM in the June quarter. That 20-25% of the TAM was all 250 and 320 and while we have begun initial shipments of our 320, it’s only now being qualified. We will be qualifying it and have volume shipments in the June quarter but we’re probably still only gaining access to half of that 20-25% or something in the June quarter. Keith Bachman – BMO Capital Markets: The second question then is, on you mentioned some pricing activity by your competitors towards the end of the quarter. Is there a way that you can characterize, that always sends a shiver through investors, is there a way that you can characterize how the behavior may have changed particularly with some of your competitors who have been acting well in terms of the environment for the last few quarters?

I don’t know how to answer. I mean again I think this March was a little bit like last year’s March. I mean sort of the same things happened a year ago. I would characterize this is that there were some people that made some deals and we obviously decided not to participate and we think it was the right thing to do. But I wouldn’t get overly; I mean this was not that bad. I mean I’ve seen a whole lot worse, let me tell you. So again I think this is kind of people taking some short-term deals. We think that the impact of that is going to be minimal to the overall business and for us we think we did the right thing by pulling back and maintaining our gross margins and pricing. Keith Bachman – BMO Capital Markets: The final one from me then is just any kind of color or commentary you want to provide on the recent lawsuit, I think it was either this week or last week.

I mean the only comment I can say is that this is simply about protecting our $7 billion investment that we’ve made over the last ten years and research. I mean we have developed a lot of technologies in these application spaces and we’re going to protect it. And we will protect it. I think the nice thing about it, I noticed that they’re not, in the press they’re obviously operating [unintelligible] they’re just going to argue whether the patents are valid or not.

And your next question comes from the line of Andrew Neff - Bear Stearns. Andrew Neff – Bear Stearns: I’d like to go back to the last question, just the first part in terms of the, I guess the concern one has is that we have an environment where your competitors are beginning to push product in the market, inventories are rising, the economy is slowing, don’t you think you’re being a little bit optimistic about the outlook. And I guess the other part of that, you know for a lot of us this is déjà vu, you know the industry has sort of over producing again, why should we take a different look?

I don’t think we were being overly optimistic, we’re showing the typical seasonal down of 5% in units quarter over quarter and we’re showing and forecasting pricing at the high end of what the typical pricing curve is during a June quarter and typically in a June quarter you have more capacity than there is demand during that period of time. So by going the full distance on what the seasonal decline is and what the pricing environment would normally yield I think we’re trying to recognize the environment that we’re in.

Yes, we’re talking about a quarter that’s arguably if we’re in a recession we made $0.70 a share on 10% plus growth here and so I really disagree with the same old same. I mean are there the same characteristics industry yeah, did we have big Christmases and big Septembers and we’ve got a cycle within the industry? Yes. But that’s for sure and how we manage that’s critical. But we’re all managing that to a much higher level of profitability than the industry ever came close to in the 90’s. So I don’t think it’s the same, I think some of the same characteristics are there and then you argue that we have a tremendous demand profile as more and more content gets digitalized. So I disagree with your premise it’s the same old business. Some of the same cycles and we have some of the same, we’ve got to maintain and we’ve got to manage this correctly and I think you saw how we acted, we kept gross margins up and we made $0.70 a share and again three or four years ago you’d be looking at things we’re losing money. And so again I think the industry is doing a whole lot better in managing their way through these cycles.

Just to punctuate what Bill has said if you look at the operating income that we’ve guided to for the fourth quarter and compare it to the fourth quarter last year that would represent a year over year increase in excess of 20%. Andrew Neff – Bear Stearns: That’s my concern Charles is that you know the pricing just began to get bad you said and there’s still a lot of those inventories are high out there, your inventories are high, I mean the highest sequential [inaudible] I’ve seen in a long time. I guess are you going to ramp back on production, what are you going to do to address that?

Dave addressed that in his comments indicating that we would adjust our production that we expected our turns in the June quarter to end at approximately 9 and the reason that he discussed putting drives on the ocean was twofold, one for freight savings given the cost of fuels and everything today but then also to allow us to better balance capital investment because of being able to defer some things that would normally go in during September and December for the peaks. And so you know I think in forecasting a conservative June forecast and having that conservative forecast still representing in excess of a 20% year over year growth on operating earnings shows a pretty mature level of operations associated with it.

And your next question comes from the line of Shaw Wu - American Technologies. Shaw Wu – American Technology Research: Charles, just on you didn’t provide explicit gross margin guidance but kind of running the assumptions that you gave, I get gross margin around 23%. And the question I’m asking here is this seems to be more than just a seasonal decline in terms of gross margin. Just wondering what other puts and takes are there in there. Is pricing a big factor? Thanks.

I suspect you were listening to the Intel call and got on a little late Shaw. The like for like pricing that we have built into the forecast on the June quarter is to the high end of the 4% to 7% decline. We are typically able to offset a fair amount of that with increased mixes in capacity or performance drives, higher capacity higher performance. This quarter we were only being able to partially offset that and so it represents between 3-3.5 points of margin compression. Shaw Wu – American Technology Research: I’m just looking at last year, you know last year you end up with just 110%, I’m sorry 110 basis points and it just seems like this year the decline is a bit, and it’s obviously a bit steeper than that. So I was just trying to understand that better. I mean is pricing, you know you just talked about pricing now but it sounds like it’s a pretty, sounds like that’s a big component.

I would have to go back and look at last year and I haven’t refreshed up my head but I suspect the pricing is somewhere in the neighborhood of 150-200 basis points more aggressive this year than it was during the same period last year.

And Shaw, just as a comment, if you go back and look at March quarter, because of the high capacity pricing that occurred in the March quarter, we actually settled out at a much lower level in the March quarter than we would have normally so I think that the decline or the margin compression from March to June is probably a little bit of an aberration last year versus what the norm is.

Your next question comes from the line of Mark Miller - Brean Murray. Mark Miller – Brean Murray, Carret & Co.: First it appeared to us that especially later in the quarter that there was a lot of inventory build in the mid capacity 500-gigs, 3.5-inch market, a lot of these drives that appeared to us appeared to be 3-platter designs, I’m just wondering if these had been 2-platter type configurations, would you have seen less drop in demand? Was the lack of higher density products also an issue in the 3.5-inch space?

I don’t think it had anything to do with it Mark, I think the number of disks inside the product is irrelevant relative to 500-gigabits and what the price point is. Mark Miller – Brean Murray, Carret & Co.: You’re going through a major change right now, [Komag] was a little lower at one of your suppliers, just wondering if you could give us some color as to how that’s going in terms of the transition, are you happy with your yields, are you happy with the performance in terms of this transition?

First from a finished media standpoint that’s long behind us, we have a new partner, it’s gone extremely well both in terms of how we transitioned out of WD as well as how we ramped the new partner, so that’s gone extremely well, no issues there. And then finally as you know we also transitioned away from WD in terms of aluminum substrate and we have continued to invest in internal capacity and begin shipping volume out of Johor, Malaysia, that too has gone extremely well. So no issues thank you.

Your next question comes from the line of Christian Schwab - Craig-Hallum Capital. Christian Schwab – Craig-Hallum Capital: Could you just remind us what normal seasonality on a unit drop Brian would be in desktop and mobile?

About the 5% we [inaudible] out for the June quarter. Christian Schwab – Craig-Hallum Capital: I’ve looked through my model all the way to the beginning here and I can’t find a time when we’ve had finished goods as a percentage of future shipments as high as it is going back to 2004 which was a very difficult time for the industry. It seems that the difference between over building to demand by 100,000 drives and building to demand is always the key in pricing so now that you have you know restrained yourself from partaking in excessive rebates that your competitors did at the end of the quarter, maybe they missed volume in January and aggressively had to make for it in March and you chose not to participate. But as we go into the June quarter which is an extremely difficult quarter and you’re sitting there with that inventory and maybe in the next three to four weeks we find out there’s all kinds of other people with the same inventory, I’m just trying to get comfort that we’re not on the verge of a very aggressive pricing environment going into June.

I can’t guarantee what everyone’s going to do but again I think you know obviously we’re very focused on maintaining our gross margins and pricing and we’re going to look at this as a three quarter deal and as Dave said, we’re going to take our inventory, we didn’t put it in the channel, we didn’t do any of the deals, we kept it in our own and we’re going to take it and put it on boat, we’re going to take the lower cost and we’re going to use this inventory and what inventory we create in June we’re going to use it to offset capital investments we’re going to make for the September December quarter and try to utilize this actually to our favor. And again we think maintaining this sort of discipline, we think we’re in an industry that’s growing 10% as we all grow with the industry and we’ll do fine and we’re kind of focused on that and we think if people take a longer term look at things and I’m hoping the industry and I do believe the industry gets better every year on this, that again we’ll look at this as an opportunity to minimize or at least optimize our capital investments and use our inventory to optimize that for the September quarter. Christian Schwab – Craig-Hallum Capital: Great, some of our checks kind of suggest that maybe the other person in southern California from you was more aggressive towards the end of the quarter in the distribution channel on 3.5 inch; do you think it was them or do you believe it was more a similar Asian competitors that have been aggressive?

We all got fingerprints on this body so I’m not going to go blame anybody. I mean we know as an industry what we have to do, we know what good management is and if people do that and we’re going to do the right thing and we think the right thing will be good for us and the industry will get there.

Your final question comes from the line of Jayson Noland - Robert Baird. Jayson Noland – Robert W. Baird: Charles you mentioned at the analyst day a break-even gross margin of 12-13% and F08 and that’s improved a lot over the last few years. Is that something that continues to improve going out for the next couple years?

I think that the, we’re probably going to plateau here at 13 for a while and see what that mix has. I think we need to be careful to make sure that we’re continuing to invest in R&D to a sufficient level to be able to maintain the breadth of product and the breadth of markets that we serve. We perhaps have a little bit more efficiency on the G&A side but we’re also investing in services that have a higher model below the line spending and other investments that aren’t even generating revenue at this point in time. So that I think we’re probably about where we would be for the foreseeable future as we take a couple of next steps. Jayson Noland – Robert W. Baird: Brian with the home storage opportunity, could you talk about big picture what that could look like going out a few years and then specifically anything you can say around network attached storage at home and would this include some sort of subscription model maybe?

Well it’s probably a little too expansive to handle on an earnings call but let me tell you that we certainly believe that storage in the home is on the verge of another great growth experience over the next five years and our estimates would have it, I think it’s been backed up by some third parties on the order of 10x over the next five years. As that happens we think there’s a fundamental shift from islands of content that exist today in the home to things that find their way onto the network either locally or wide area. And so as that content finds its way to those networks then I think yeah there’s obviously, absolutely all kinds of different models you can conceive of how you participate in that value chain. So I think it’s going to be device level, appliance level types of opportunities in the home in addition to things that expand outside of that in the local and wire network.

I want to thank everybody for joining us on the call today and we look forward to speaking to you next quarter. Thank you.