William D. Watkins - President, Chief Executive Officer, Director Kurt Richards - Executive Vice President of Sales and Customer Service David A. Wickersham - President, Chief Operating Officer Charles C. Pope - Chief Financial Officer, Executive Vice President Brian S. Dexheimer - President, Consumer Solutions Division

Mark Moskowitz - J.P. Morgan David Bailey - Goldman Sachs Katy Huberty- Morgan Stanley Richard Kugele - Needham & Company Aaron Rakers - Wachovia Paul Mansky - Citigroup Steven Fox - Merrill Lynch Keith Bachman - BMO Capital Markets Jayson Noland - Robert W. Baird Christian Schwab - Craig-Hallum Capital

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Seagate Technology’s fiscal fourth quarter and year-end 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 to Seagate as of the date of this conference 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 actual results to differ materially from those projected in the forward-looking statements is contained in the company’s annual report on Form 10-K as filed with the U.S. Securities and Exchange Commission on August 27, 2007 and the company’s quarterly report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on April 29, 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 update forward-looking statements to reflect events or circumstances after the date they were made. I would now like to turn the conference call over to our host, Mr. Bill Watkins, CEO. Please go ahead. William D. Watkins: Thank you, Wesley. Good afternoon and thank you for joining us today. On the phone with me are Dave Wickersham, our President and Chief Operating Office; Charles Pope, our Executive Vice President and Chief Financial Officer; and Kurt Richards, our Executive Vice President of Sales and Customer Service. Brian Dexheimer, our President of Consumer Solutions, and Pat O’Malley, our income CFO, are also available to answer questions during the Q&A session. I’d like to start this afternoon’s call by sharing some perspective on the fourth quarter and the fiscal year we just completed, and provide some comments on our outlook for the first quarter and the remainder of fiscal year 2009. I will then turn the call over to Kurt, Dave, and finally Charles, who will cover in our detail our market operating and financial results for the quarter and the year. In fiscal year 2008, we set new records for units shipped and revenue, which were up 15% and 12% respectively over fiscal year 2007. We delivered equally strong results in net income, which totaled $1.3 billion, up significantly over last year. Specific to the June quarter, Seagate's market leading position remained unchanged in the enterprise and desktop markets. We expanded our leadership share position in the consumer electronics market and grew share in the notebook and retail markets. And while we are certainly pleased with that kind of growth and are gratified to see the demand trends for storage continue to accelerate, we believe and we can and should be doing much better at turning an abundance of opportunity into better performance and better return for our shareholders. To that end, we focused considerable effort over the past few quarters, successfully getting our product execution back on track, particularly in the notebook arena, where we have lost some of the first mover advantage we have historically enjoyed. We are gaining traction now with a new product lineup that will serve all markets, including the notebook market, and we expect to see significant improvement in Seagate's performance in the December quarter and continue that throughout the remainder of fiscal year 2009. In addition to a relentless focus on product execution, we are taking action to align our cost structure with the current competitive environment, ensuring that we are investing in the right areas, operating as efficiently as possible, and eliminating redundancies. Dave and Charles will provide more details about these efforts later in the call. Before I turn the call over to Kurt, I want to reiterate what I see as an important opportunity in our retail segment -- the business represents a significant revenue opportunity for Seagate and we are determined to be a leader in this space. We’ve been essentially flat from Q4 of last year and that’s not the kind of performance I see going forward. Our newly formed consumer solutions division is focused on improved operational execution and launching new products over the next few quarters, which I believe will lead to additional growth. Although the residual effects of our previously mis-execution in the notebook in the near line markets will be reflected in the results of the September quarter, and the macroeconomic climate does cause some current uncertainty, we believe that our performance is largely dependent on our factors within our control. We have made strides in reclaiming our product leadership. We have confidence in our plan and we believe that we will grow revenue and improve earnings throughout the remainder of fiscal year 2009. With that, let me turn the call over to Kurt.

Thanks, Bill. As Bill mentioned, on the whole we expect the storage industry to continue its long-term growth profile. All macro trends from the industry, including creation, distribution, and consumption of digital content are driving significant unit demand. As a result, we believe the industry total available market, or TAM, grew by 83 million units during the fiscal year to approximately 541 million units. Nearing fiscal 2009, we see a few near-term challenges but believe the industry will again experience solid year-over-year unit growth. Specific to June quarter, we believe the overall industry TAM was approximately 131 million units, up 18% year over year and down only 1% for the quarter, which was better than our expectations at the beginning of the quarter. During the quarter, Seagate shipped 43 million units, up 10% year over year. We expect the overall TAM for the September quarter to be up approximately 18% quarter over quarter to approximately 154 million units. This represents a 15% year-over-year growth. Now I’d like to give some details on the individual markets. In the mission critical enterprise space, the TAM in the June quarter remained strong at approximately 8.3 million units, representing 20% year-on-year growth. Seagate retained its share leadership position in this space as shipments grew 21% year over year to 5.2 million. For the fiscal year, Seagate shipped over 20 million enterprise drivers, more than 60% of overall enterprise drives shipped. Demand remains strong for high capacity enterprise class SATA products. While we maintained our leadership position in this application in the June quarter, we believe additional qualifications in the coming quarter with our new Barracuda ES products will provide additional opportunities in this space. Looking forward to the September quarter, we expect the overall enterprise demand to be flat to slightly up seasonally. The TAM on the desktop compute market for the June quarter was approximately 59 million units. Seagate also retained its share leadership position in this market, shipping an industry leading 25.4 million units during the quarter, representing better than a market growth of 6% year over year. For the September quarter, we expect the desktop compute TAM to be seasonally up. In the consumer electronics applications, we believe the industry TAM was approximately 18 million units. Sequentially, Seagate extended its share leadership position in this space as shipments grew 11% to 5.7 million units. In particular, we saw in-quarter strength from several DVR customers who increased volume requirements in quarter. We remain confident that our line of pipeline HD products designed specifically for video dependent applications will continue to set the standard for customers expectations in this space moving forward. We begin qualifications at several OEMs during this quarter for this new line of products. We expect the CE market will experience higher seasonal demand in the September quarter. With regard to the mobile market, the overall TAM grew 48% year over year to approximately 46 million units. We grew share sequentially by a few percentage points as Seagate shipments reached 6.9 million units, an increase of 12% year-on-year. Fiscal year shipments for Seagate grew at 37% to 26.7 million units. We expect the September for mobile compute market to exhibit normal seasonality and be up from the June quarter. In our branded products business, we continue to make progress. We believe industry sell-through in this market was seasonally lower, as expected. Largely based on continued supply chain performance and improved product mix, we believe Seagate gained share sequentially. Specifically, Seagate's percentage of shipments and share increased in the 2.5-inch products of 250 and greater, as well as 3.5-inch products 750 and greater. We remain focused on continued operational improvements and new product launches over the next few quarters, which will lead to improved results in this fast-growing global market. Now I’d like to turn the call over to Dave to provide some updates on operations. David A. Wickersham: Thanks, Kurt. I will cover four topics with you today; the recently announced closing of our media operations in Milpitas, California, inventory, capital, and new products. Last week, Seagate announced additional restructuring charges related to the ongoing realignment of our media operations. The closing of the Milpitas, California media operation will be completed by early October of this year. Consolidating our media production operation provides cost reduction opportunities in addition to inventory and transit time reduction. The savings expected from the closing of the Milpitas media operation is expected to be approximately $42 million annually. In addition, our previously announced closure of our Limavady substrate factory is on schedule and will be completed by October of this year. This is expected to result in annual savings of approximately $30 million. As Bill mentioned, we are focused on more effectively aligning our cost structure and these are two of the many actions we will take over the next year to improve our financial results. In the June quarter, we made progress towards properly aligning Seagate's inventory. Our inventory decreased $128 million quarter over quarter from $1.073 billion to $945 million, while inventory turns improved from 8.5 in March to 9.3 turns in June. A decrease in finished goods of $130 million accounted for virtually all of the reduction quarter over quarter. We remain focused on the requirement to improve our inventory turns while we continue to utilize ocean shipments to help offset the increase in fuel costs. Consequently, we expect to again improve inventory turns modestly to approximately 10 in the September quarter. Fiscal 2008 capital investment came in at $930 million. Looking ahead to fiscal 2009, and 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 in this manner. Accordingly, the current outlook for fiscal year 2009 capital investment is approximately $1 billion. Last quarter I mentioned the execution of product transitions to new, higher aereal density products was critical to our success. Recovering and sustaining time-to-market leadership remains a top priority. We have taken appropriate steps to improve our results and are confident in our ability to improve our new product execution. In the enterprise segment, we remain focused on maintaining our product and technology leadership. We continue to see the mix of mission critical enterprise products in the market continue to evolve to 3.5-inch 15K RPM products, 2.5-inch 10K RPM products, and SAS interfaces. This aligns well to our product roadmap and storage trends such as server virtualization and ISCSI SANs. Our 15K RPM 450-gigabyte product ramp started in the June quarter and we have three major OEMs qualified. We expect to have the vast majority of the major OEM qualifications completed by the end of September. To further strengthen our position in the enterprise market, last quarter we announced the shipment of the industry’s first 1-terabyte product with SAS interface. Customer interest in this product continues to grow and we have completed two key OEM qualifications and expect to complete two additional qualifications by the end of September. In the personal compute market, we continue to gain traction with new products, including the industry’s first 1.5-terabyte desktop product and half-terabyte notebook drives, announced last week. For the notebook market, the ramp of the 250-gig notebook drive has been completed and our participation in the 250-gigabyte capacity point in the June quarter was reflective of our overall notebook market share. Qualification of our 320-gigabyte notebook product is in process, with some of the early movers already completed. For example, we announced during the quarter that we were shipping to a major OEM the industry’s first 7200 RPM 320-gigabyte notebook drive. The notebook market is expected to be highly competitive during the balance of calendar 2008, as most HDD suppliers are shipping comparable products. Our checks indicate that we are making progress restoring our time to market competitiveness in the notebook market and we expect to begin volume shipments of our 5400 and 7200 RPM 500-gigabyte notebook drives in the December quarter. So while we have made progress, we will remain relentlessly focused on improving product execution. Now I would like to turn the call over to Charles. Charles C. Pope: Thanks, Dave. 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. I will cover the financial results for the quarter and the outlook for the September quarter. Pat O’Malley, who will be taking over the CFO role next month, is also present and will participate in the Q&A session. For the June quarter, Seagate reported revenue of $2.9 billion and unit shipments of approximately 43 million, which reflect year-over-year growth of 6% and 10% respectively. Seagate stayed focused on maintaining supply/demand balance by reducing its own finished goods inventory by 21% and ending with 4.2 weeks of inventory on hand in the distribution channel for 3.5-inch ATA drives calculated using a four-week average of shipments out. GAAP net income and diluted earnings per share for the June quarter are $160 million and $0.32 respectively. Included in the GAAP results are approximately $23 million of purchased intangibles amortization and other charges associated with recently completed acquisitions. Without these items and the associated tax effects, non-GAAP net income and diluted earnings per share was $183 million and $0.37 respectively. Included in both the GAAP and non-GAAP results is approximately $36 million of restructuring costs, which reduced diluted earnings per share by about $0.07. In regards to the $36 million restructuring charge in the June quarter, $16 million relates to the winding down of the media substrate plant in Limavady we announced last October and $20 million relates to severance costs for the just announced closure of our finished media operations in Milpitas, California. As detailed in the 8-K we filed last week, we expect the total charges related to the closure of the Milpitas facility to be approximately $74 million. Of the $74 million, approximately $36 million will be cash, primarily for severance payments. In the September quarter, we expect to record charges of approximately $43 million, of which $38 million will be for accelerated asset depreciation, which will be reflected in cost of goods sold. Additional detail relating to the Milpitas closure can be found in the 8-K we filed last week. For our fiscal year 2008, we reported revenue of $12.7 billion, up 12% year over year. Cash provided by operations was $2.5 billion and free cash flow, defined as net cash provided by operating activities less capital expenditures, was $1.6 billion. During the fiscal year 2008, Seagate returned approximately $1.7 billion of cash to its shareholders, consisting of approximately $216 million through quarterly dividends and approximately $1.5 billion of share repurchases. GAAP gross margin for the June quarter was 23.8%. Excluding approximately $8 million of acquisition related costs, non-GAAP gross margin was 24.1%. Gross margin was slightly better than expected due to favorable freight costs and lower product return rates leading to favorable warranty costs. Like for like pricing for the quarter was as expected, near the high end of the normal range for a June quarter. GAAP R&D and SG&A costs were $445 million for the June quarter. Excluding costs related to recent acquisitions, non-GAAP expenses were $443 million, higher than what we had expected due to litigation cost and spending aimed at improving time to market, future technology development, and expanding our markets. Slide six has the detail for the adjustments made to GAAP R&D and SG&A for the June quarter. Cash flow from operations was $395 million for the June quarter, while free cash flow was $102 million. Cash, cash equivalents, and marketable securities ended the quarter at $1.14 billion, down $142 million from the previous quarter. During the June quarter, Seagate returned approximately $252 million of cash to its shareholders, consisting of approximately $57 million for the quarterly dividend and $195 million of share repurchases. Capital investment in the June quarter was $293 million and for the fiscal year totaled $930 million. As Dave previously indicated, our current plan is for approximately $1 billion of capital investment for fiscal 2009. Depreciation and amortization for the June quarter was $213 million, essentially flat from the prior quarter. Amortization of purchased intangibles totaled approximately $20 million. During the June quarter, the company repurchased approximately 9.1 million of its common shares at an average price of $21.36. The company has authorization to purchase approximately $2 billion of additional shares under the current stock repurchase program. Now turning to the business outlook, the September quarter is shaping up to be a challenging quarter for Seagate so I want to clearly summarize the factors influencing our outlook for the September quarter. We are expecting like-for-like price declines beyond the high-end of the historical ranges for a September quarter, which is 3.5% to 5%, due to ample availability of supply and the commonality of product and capacity offerings among the hard disk drive suppliers. It should be noted that a majority of the price declines are already in place because of completed OEM negotiations. This pricing dynamic, combined with Seagate selling the less cost effective products represented in our June quarter inventory, creates significant margin compression in the September quarter. We expect the favorable impact of our lower cost new products to be substantially realized as we move into the December quarter. As our new products move into volume production and the company’s cost reductions take effect, we are confident in returning to our model for gross margins. Also, it should be noted that the macroeconomic conditions has created an environment of limited visibility and increased order volatility toward the industry. Consequently, Seagate expects revenue to be in the range of $3.15 billion to $3.3 billion, GAAP diluted earnings per share is expected to be $0.18 to $0.22, and includes approximately $20 million of purchased intangible amortization and other charges associated with completed acquisitions. Accordingly, non-GAAP diluted earnings per share is expected to be $0.22 to $0.26. These estimates for the September quarter do not include restructuring costs or accelerated depreciation charges related to the previously announced closing of our substrate operations in Limavady and the finished media operations in Milpitas, California. Additionally, this outlook does not include the impact of any future acquisitions, stock repurchases, or potential restructuring activities the company may undertake during the quarter. R&D and SG&A expenses are experiencing upward pressure due to the 14th week in Seagate's September quarter, but we expect to offset this with reductions in discretionary spending and variable compensation costs and therefore expect R&D and SG&A expense to be flat compared to the June quarter. As Bill has mentioned, we are actively working and executing plans that will more properly align operating expenses with revenue during the course of the year. Other income and expense is expected to be a net expense of approximately $20 million. That concludes my remarks. I will now turn the call back over to Bill. William D. Watkins: Thanks, Charles. Now I’d like to make a few comments regarding how we view the long-term outlook for the industry and Seagate. We believe that the demand trends for storage will continue to support healthy growth in the industry unit demand in a 10% to 15% annual range at an annual revenue growth of 5% to 10%. Specific to Seagate, we are confident that the plans we have begun to execute will improve our performance relative to time to market, inventory management, and our overall cost structure. The path to improved financial performance will not be a step function move but will be incremental as we implement numerous changes across all three areas during the fiscal year. We expect gross margins to begin improving with the December quarter and settle into the targeted range of 21% to 25% for the balance of the fiscal year. With that, I would like to open it up for questions. I am currently traveling so I am going to have Dave moderate the questions. With that, Operator.

(Operator Instructions) Our first question comes from Mark Moskowitz with J.P. Morgan. Mark Moskowitz - J.P. Morgan: Thank you. Good afternoon. A few questions; could you maybe help clarify again the impact on the margins for the September quarter? Can you maybe prioritize or rank order the impacts in terms of how much of it is related to fully available supply by all of your competitors and thereby the associated pricing detriment versus maybe increasing fuzziness in terms of the murky demand environment because of the macro, or other? David A. Wickersham: Mark, let me try to answer that question. If we sat and looked at what we have modeled into our pricing, we’ve modeled approximately 7% price erosion for the September quarter with the historic range having been 3.5% to 5%. Now, embodied in all of that is the economic environment we’re in, the commonality of products, the ample supply throughout the industry, all of those types of things are embodied in that price erosion figure. There is uncertainly relative to demand and visibility to that, at least in the early part of this quarter. That is historically the case where July and August are a little slower demand and then tend to pick up in the latter half of August and September. So we have a significant pricing pressure this quarter and as we indicated, for the bulk of the September quarter we are still going to be shipping the products that were in process during the June quarter which, to a very large extent, represent some of the older, less cost effective products. And then as we start migrating through the September quarter and into December, we expect to see a meaningful improvement in that area. But it’s that cost structure along with the pricing pressure that is giving the margin compression for the September quarter. Mark Moskowitz - J.P. Morgan: And then if I could follow-up on the 7% price erosion bogey, how much of that is static in terms of dependent on the OEM versus maybe some swing factors that could go in your favor on the distribution side, or increasing market penetration in notebooks or higher cap desktop? Can you help us out there? David A. Wickersham: Well, a little more than half of it is OEM based, leaving the rest for whatever the distribution environment represents during the course of this quarter. Mark Moskowitz - J.P. Morgan: Okay, and then my second question is Dave, can you maybe help us understand, as Bill was talking about the move toward lower cost product structure, helping out your December quarter later this year, what are kind of the puts and takes there? How much of that is going to be based on internally developed disk drives using recording heads and media internally developed versus maybe using externally developed recording heads and media? David A. Wickersham: Mark, let me just hit that head question because as Bill mentioned, and Charles did as well, a large -- probably the largest component of our cost opportunity going forward is the successful transition of new products ramped, so let me just hit the question that I understand you are asking. Regarding whether or not we are considering the use of external technologies, as everyone knows we have a model on media that’s worked very, very successfully, which allows us to selectively use external media on particular products at roughly 10% of our total requirement. We are looking at evaluating something very similar to TDK. I wouldn’t normally mention supplier names on this call but given they are the only independent head supplier left, I’ll just get that out there and just be straightforward. So we don’t have any shipments with them today. We are currently evaluating the use of TDK heads at this point in time. As many of you know, TDK is a very valuable and strategic supplier on a number of components today and so we are very comfortable with pursuing an agreement and a relationship on heads as well, but I’ll emphasize a couple of things. One, it will be very similar to the media model in that it would represent 10%, approximately 10% of our total volumes, which says we’re continuing to be dependent as we are for media on internal head development and operations. And so in this case, just to get to the point that I think you might be thinking about is that as an example, the recently announced 1.5-terabyte desktop drive as well as the recently announced 500-gigabyte notebook drives will include Seagate heads. So all products will have Seagate heads and then selectively, if we proceed with TDK arrangements, which again is being looked at and considered, that would represent a smaller portion, roughly 10% of our total volume requirements. Mark Moskowitz - J.P. Morgan: And is it safe to say, given your examples there in terms of the products that it would be focused on more than just one form factor, that if it does work out where you find a mutually agreeable situation, you could apply it to both notebooks as well as desktop, or even enterprise? Or would it be staged? David A. Wickersham: That really is something that we could work out with TDK. We would basically have the flexibility but it is a very limited number of products and we would work together, as we do on media, to plan that via a roadmap planning and intercept point. So we would have the flexibility, Mark, is the short answer to use it on any product and any segment. Mark Moskowitz - J.P. Morgan: Okay. Thank you and Charles, best wishes in your future endeavors. David A. Wickersham: Thank you, Mark. Next question.

Your next question comes from David Bailey with Goldman Sachs. David Bailey - Goldman Sachs: Great. Thank you very much. Can you give us some more detail around the product execution problems that you are having and the impact that this might have on the September quarter? Are these new issues on the notebook side or are these the issues you’ve been dealing with for the past few quarters? David A. Wickersham: I think it’s the latter. It’s the issues that we’ve been dealing with for the past several quarters, specifically and I think as has been discussed primarily in notebook, which has impacted not only our ability to both profitability and TAM access in the notebook space but has also impacted Brian in the retail space, so we’ve been very vocal about that. And what we are describing is how we are catching up and position with this 500-gigabyte drive we think will be competitive. The other one that is contributing to that has been in the 1-terabyte near line space and we’ve talked a little bit about that, and that -- those two are somewhat similar in that they also were compounded or confounded with the execution and deployment of some of our platform technologies. We’re through that and now it’s just a matter of getting our focus on the qualifications done on every market segment. So it’s really nothing new here. You’re not hearing any new execution issues. We’re just pointing out how that has prevented us from getting the full benefit of those new products, both in notebook, retail, and in enterprise space in the September quarter and we hope with our execution and planned execution through September that you will see the full benefit of that in the December quarter. David Bailey - Goldman Sachs: And then just a follow-up on the pricing side -- are you being more aggressive with pricing on the notebook side as you try to regain some of the share that you’ve lost? Charles C. Pope: Our strategy has always been to meet the market and not lead the market. I think that we are still trying to execute to that strategy as well as we can, given the visibility that we have in the market. David Bailey - Goldman Sachs: Thank you.

Your next question comes from Katy Huberty with Morgan Stanley. Katy Huberty- Morgan Stanley: Dave, last quarter when you talked about extra inventory at the end of June on [inaudible] in order to catch the positive inflection point in July, it sounded like you expected to see the seasonal up-lift pretty quickly here. Are you seeing anything different in terms of either the level of demand or timing of that demand for the September quarter build? David A. Wickersham: As Charles indicated, I think that we have a little bit less visibility. It’s not unusual to have a lack of visibility in the July quarter at this point in time but I would say our visibility is limited and so we are being very cautious in terms of how we plan basically all of our inventory capital going forward, just given that limited visibility. So I would say it’s a little bit unique this year in that regard. Katy Huberty- Morgan Stanley: Okay, and then Fred or Dave or Charles, it sounds like your channel inventory is at the lower end of the typical range. Inventories on your balance sheet are much healthier than March. Where is the excess supply in the industry, if it’s not on your balance sheet and it’s not your inventory in the channel? David A. Wickersham: Well, I don’t know that I can answer that question clearly, Katy. If you look as an example, the last week of the June quarter, the 13th week, on 3.5-inch ATA and 2.5-inch ATA products, the industry shipped 20 million units, approximately 20 million units that week, compared to the 12 week average of 8.1 million units. So I’m not sure that the inventory is in the hard disk drive suppliers’ hands or balance sheet. It may well be in the customers’ and I don’t have clear visibility relative to the individual suppliers’ inventory levels in distribution channel or anything, just ours. And ours was at 4.2 weeks. Katy Huberty- Morgan Stanley: Okay, that’s helpful math. And then lastly, what made you hold the buy-back back in mid-April? It doesn’t look like you did anything after April 14th. David A. Wickersham: We did not do anything after April 14th and it’s a situation where, given the transitions we were going through and the restructuring that we are anticipating and everything, we felt it prudent to maintain the cash so that we were able to maintain the liquidity and not create any issues. Katy Huberty- Morgan Stanley: Okay, thanks.

Your next question comes from Rich Kugele with Needham & Company. Richard Kugele - Needham & Company: Thank you. Just a couple of questions here; I guess Dave, just to get into the CapEx a little bit more, can you reiterate what your expectation is for how the $1 billion might break down between the various segments, as well as in light of I guess a good way to look at Milpitas was about $10 million a quarter of media production. So if you go and take that out of worldwide supply, your thoughts on that. David A. Wickersham: Okay. So Rich, I won’t break it down into market segment but I will break it down into what I describe as a more -- it’s really a more typical or traditional mix, maybe one-third, one-third, one-third roughly between heads, media, and then what I call the back end of the line, the assembly and test, unlike a little bit more facilities investments for the woodlands three and Johor in ’08. So the $1 billion represents more technology and then just aligning the supply chain to the roughly 10% to 15% unit growth that we anticipate year over year. As far as by taking Milpitas capacity offline, we think there’s certainly adequate capacity between Seagate and our partners to cover Seagate and likewise, I think with the plan investments and finished media capacity, I don’t anticipate any kind of media shortfall. It’s obviously tighter in December on paper but I think there’s adequate planned or installed capacity to handle that. Richard Kugele - Needham & Company: Okay, and then just lastly on pricing, I understand your products not necessarily being at the upper end and not being able to participate there, in part for why the 7% down but do you think the industry will also see 7% down? And you know, because there are other companies who have aereal densities higher and are participating at different levels. Is that an industry number or is that a Seagate number? David A. Wickersham: The 7% that I quoted is a Seagate. There are probably a few capacity points or something, or a few unique products in the industry that are outside of that and may not have the same type of pressure but I think they are very few in exception. And as I indicated, our intent and our strategy is to meet market, not lead market, so I would be surprised to find that the entire industry is meaningfully different than that. Richard Kugele - Needham & Company: Okay. Thank you very much.

Your next question comes from Aaron Rakers with Wachovia. Aaron Rakers - Wachovia: Thanks, guys. Thanks for taking the question. I guess one clarification, if I can go back to the commentary around the new 500-gig products shipping; are you telling us that when that product ships, it will be using Seagate heads at this point? Or would you position yourself to using TDK up front and then quickly there following after with Seagate heads? I’m just trying to understand if you are getting into the market using -- if there’s a technology challenge that you guys are trying to overcome. David A. Wickersham: Let me take that. We’re not going to talk specifically, as I said before, nor have we ever on media or any other specific supplier strategy by product. I would only suffice it to say that that will have RHO heads include. It’s yet to be determined how and where we’ll be going to deploy the TDK technology. It’s still being evaluated and frankly qualified as well. Aaron Rakers - Wachovia: Okay. And another clarification, if I can then, on the guidance for the gross margin, I believe you had mentioned that you were going to take a $43 million restructuring charge that’s not included in the guidance for this next quarter on a non-GAAP basis. But when we look at the EPS report this quarter, we did see a restructuring charge. Are we to come out next quarter and then see restructuring charges at $43 million included in the numbers? David A. Wickersham: That is correct. Aaron Rakers - Wachovia: Okay, so $38 million -- so that roughly 18% what it looks like in terms of the gross margin, that’s exclusive of a $38 million charge to COGS? David A. Wickersham: That is correct. Aaron Rakers - Wachovia: Okay. And then final thing -- in the past you’ve been able to give some color on free cash flow generation. Could you take a stab at what you currently see or expect in terms of free cash flow for fiscal ’09? Charles C. Pope: I’d be hard-pressed to give the fiscal ’09. I expect the September quarter to be difficult and it, with the restructuring, may well be a negative free cash flow for September. I would expect good free cash flow numbers past September because there won’t be the restructuring. There will be some expansion in margin during that period of time and relatively balanced capital equipment acquisition over the course of the year. Aaron Rakers - Wachovia: Thanks, guys.

Your next question comes from Paul Mansky with Citigroup. Paul Mansky - Citigroup: A clarification; on the question, I wanted to kind of go back to the consumer expectations. You mentioned that you expected normal seasonality this quarter and yet I’m sure we’re all pretty acutely aware that it’s anything but normal out there presently now. When I think about that in the context of your guidance, which also does at the top line, at least, look fairly normal, normal seasonal, where are the puts and the takes that would give you some -- how shall we say, some wiggle room relative to that consumer volatility? Hello? Brian S. Dexheimer: Let me tackle that. I think your question is probably a little bit broader than just consumer per se, so let me kind of back you up into what our expectations are. I think we mentioned in a couple of different points in the presentation, but we do expect to see 58% year-on-year unit growth across the whole industry. I think Kurt mentioned that in his comments, so upwards of 150 million drives. Now, the other thing we did mention is, and I think Dave hit on this, is the visibility to that demand is somewhat limited and maybe more so because of the economic uncertainty that you point out. So there is some risk in that. I think in the context of share growth, we’re not really planning a significant amount of share growth beyond the product execution focus that you heard a number of folks talk about so this plan is not particularly share dependent. It is dependent on a 15% year-on-year unit growth and the sequential seasonal growth that we normally see. Now, I think in the notebook space there’s every reason to believe that that will likely continue. I think in consumer electronics, there’s probably a reason to believe that that will continue as well. I think if I were going to break it down for you by market segment, the areas I might focus on would be the B2B dependent spaces like enterprise and then the pure retail space around our branded products. Those are probably the two highest risk areas relative to any changes in the macroeconomic environment that float back into our category. I will say that our category through a number of points of turmoil in the last six to nine months, this is a question we’ve been asking ourselves now for the better part of a year, has continued to persevere and so the basic overall demand for storage so far has been able to bust through any uncertainties that we’ve seen today. Paul Mansky - Citigroup: And I may have misspoke, two questions and a clarification; the second question is on the DVR comments, the intra-quarter up-tick in demand, is that a share issue or do you view that to be an in-demand issue? Brian S. Dexheimer: Well, we gained a little bit of share in the June quarter and we think overall demand was a little bit higher as well. Paul Mansky - Citigroup: Okay, great. And then on the clarification, in the press release and then again in some of the prepared remarks indicated year-over-year growth. I just want to -- you know, throughout the balance of the year, after we get out of September -- I just want to clarify that that is year-over-year growth in revenue and EPS in each quarter of the fiscal year expected following this upcoming September quarter? Charles C. Pope: It is growth in revenue. We do not expect to necessarily have year-over-year growth in earnings each quarter but we expect significantly improved earnings in December and then maintain or improve those improved earnings during the remainder of fiscal 2009. Paul Mansky - Citigroup: Thank you very much.

Your next question comes from Steven Fox with Merrill Lynch. Steven Fox - Merrill Lynch: Good afternoon. A couple of quick questions; first of all, you mentioned getting back to 10 times inventory turns as you get out to the December quarter. Is that a stopping point or do you see further improvement possibilities after that? David A. Wickersham: We see further improvements. We are doing what I’ll call some strategic buffering, given the closure of Limavady and Milpitas, so we’ve taken that into account in our September so clearly there’s some upside as we work that down to a normal profile. And then secondly as we continue to look to optimize our supply chain, you know, both in the core business as well as in our retail channel, I think there’s some opportunity there but as I mentioned, we’re also trading off some opportunities to try to be opportunistic on using more cost-effective modes of transportation where possible. So I do see definite upside to it, a turn or two, through the balance of the year but we are going to step our way through that. Steven Fox - Merrill Lynch: Okay, and then two other quick questions; when you mentioned pressures from a commonality of products, were you only talking about notebook computers or were there other areas that you were trying to reference as well? David A. Wickersham: Really, there’s a high level of commonality in all of the markets at this point in time. I think that there may be a little bit of exception in the 450-gigabyte enterprise space but if you sat and look at the desktop compute, the mobile compute, and most of the consumer electronics, there’s capacity point and performance that is very similar, so on the enterprise having the 450-gigabyte 15,000 RPM and the 1-terabyte SAS may give us a little edge in those two areas but all the rest are pretty common. Steven Fox - Merrill Lynch: Okay. And then last question was just on the time to market improvements that you can get, were you only talking about new products or are there execution opportunities, say when you sell into specific supply chains, like the retail market as well? David A. Wickersham: The answer is yes. I mean, we have time to market opportunities both in terms of completing the qualifications that I described, some of the new products that we described, and then likewise as Brian sees the benefit of us catching up on time to market, particularly in the notebook space but also in the desktop space. Brian too will see the benefit of that. Steven Fox - Merrill Lynch: Okay. Thank you very much.

Your next question comes from Keith Bachman with Bank of Montreal. Keith Bachman - BMO Capital Markets: I have two, if I could; number one, could you talk about over the next couple of quarters, or two quarters in particular, how you see the competitive dynamics on the enterprise changing either in the SAS or the SATA side, please?

I really don’t see a lot of change. I think as we said, it’s a competitive market. We’ve got competitive products. We have a couple of unique out-layers in our 450 and our 1-terabyte SAS as Charles mentioned, but don’t see the dynamics in that space any different than what we’ve seen the last couple of years. Keith Bachman - BMO Capital Markets: And so just to be clear, if I looked out over the next couple of quarters, two quarters in particular, holding, gaining, or share do you think?

Holding. Keith Bachman - BMO Capital Markets: In enterprise.

Yeah, our plan is to hold. Keith Bachman - BMO Capital Markets: Okay. Then the second question is you are coming off of your September quarter is a 14-week quarter. You already gave us the OpEx. Does that involve any incremental revenue associated with the 14 quarter? And related, as we look at December, what are the implications if any on sequential patterns from going back from 14 to 13, both on the revenues and the cost side? David A. Wickersham: Charles, do you want to take that? Charles C. Pope: Keith, there’s a lot of debate on this. You’d like to believe that the 14th week brings some additional revenue. As we sat and talked internally and talked with our customers, it seems that people tend to focus more on the quarter and it tends to be more calendar quarter oriented. Certainly as our -- the September quarter tends to be more back-end loaded and certainly with the distribution channel, we basically have to align with our competitors because of the capacity that the distributors have and that would be in our competitors’ 13th week. I think if there is some upside opportunity, it would probably be in the OEM base as they are building out for the December quarter and everything, so we think we’ve factored that in but it’s a topic of discussion. Keith Bachman - BMO Capital Markets: Okay. And just let me sneak one more then on the inventory; you mentioned there were some incremental inventories out there in the channel. I assume that’s all at the 3.5-inch level, that that’s at the channel but is it -- because I’m assuming it’s not at the OEMs. Is that a reasonable assumption? Charles C. Pope: Of the 20 million units that I referred to in the 13th week was going to both OEMs and distribution. I think that there was a lift in the distribution so that on a comparable basis, it wouldn’t surprise me if Seagate's channel inventories at 4.2 weeks are a couple of weeks below what the remainder of the industry are. You know, the difference is that on 3.5-inch ATA, you have about a 50-50 split between OEM and distribution. On 2.5-inch ATA, it’s more 75-80 OEM and 20% distribution, so it’s predominantly 3.5-inch ATA, but not all of it. Keith Bachman - BMO Capital Markets: Okay. Thank you.

Your next question comes from Jayson Noland with Robert W. Baird. Jayson Noland - Robert W. Baird: Thank you. Just a couple of questions; first, as a follow-up to the previous question, any additional color you can provide on the channel? It looks like revenues came down a bit sequentially and year over year. Is there anything going on there that you can talk about? David A. Wickersham: I think right now, I guess our version is that quarter over quarter, channel was a little bit down. But looking forward, this is typically a quarter where it has a pretty robust quarter. So I think the visibility statement applies to what we talked about earlier today. It’s really hard to kind of tell inside that today. Charles C. Pope: I guess the one embellishment I would make to that is that given the macroeconomic environment, it seems that the vast majority of the customer base are trying to run a little leaner than they historically would, which gives a little less buffer there, a little less revenue opportunity. Jayson Noland - Robert W. Baird: Okay, and then on the notebook side, last quarter you gave a percent of TAM addressed. What was your view of the percent of the notebook TAM addressed in June and then what will that be in the September quarter? David A. Wickersham: Let me take a shot at that because I don’t know off the top of my head, and maybe I’ll ask the other guys to chime in. I’ll think about it in terms of the way we are addressing the 320-gigabyte, I would say we’re only in the September quarter, maybe half of that is served of our opportunity, just given the prolonged qualifications and the late qualifications this quarter. So from a Seagate perspective, as it relates to that unique capacity point, I would say it’s roughly 50% September and then resolved in December.

I think as we exit the quarter, we’re in a much better position from a percentage of market participation, arguably early September. Jayson Noland - Robert W. Baird: Thanks a lot.

Your next question comes from Christian Schwab with Craig-Hallum Capital. Christian Schwab - Craig-Hallum Capital: Thank you. I just want a clarification of something earlier; going into the September quarter, the 7% ASP pressure, that was a Seagate-specific comment, is that correct? You would assume that others within the industry may see less than that. Did I interpret that correctly? Charles C. Pope: It was a Seagate comment. It was one like-for-like capacity points and did not reflect mix associated with it. We do see a little bit of improvement in mix so that it comes down from the 7%. I’m looking at an ASP as would be reported but on a like-for-like product basis, it was 7% and Seagate-specific. Christian Schwab - Craig-Hallum Capital: Okay. And then on the significant gross margin compression we’re looking for in the September quarter, how much of that has to do with pricing and how much of that has to do with shipping older, less cost effective products out of inventory? Charles C. Pope: Well, historically we have modeled average price erosion on a like-for-like basis at about 5% and have then wanted to offset two to three points of cost with component reduction and cost reduction product transitions, and then a couple of points with improved mix of products. This quarter, if you look at the like-for-like, we have 7% price erosion, a small amount of mix improvement, but from a cost, product cost structure perspective, it’s largely the same cost structure that we had in the June quarter as we migrate through some of these products. And so that’s the narrative. I have to kind of let you put your arm around which comes first. William D. Watkins: Let me add a little bit. I mean realistically, pricing, inventories, those are kind of new problems right now. But the real issue here is we’ve been sloppy on product execution, we’ve been sloppy on qualifications and we’ve been sloppy on how we are doing our spending. And that solely rests on me and the management team, and this is in our control. We have a plan. We’re starting to execute on it and that’s what we need to go do, because there’s plain demand out there. We have a good market but we at Seagate have got to execute, and we’re starting to do that. We’re starting to see the progress of that and I think as we go through this quarter and these product qualifications finish up, we are going to see this in December. But at the end of the day, it’s about us and what we have to go do. Christian Schwab - Craig-Hallum Capital: Right, and then on the commonality of products leading to ASP pressure, it kind of suggests to everybody’s mindset that we should see maybe price wars or very aggressive pricing. But then you kind of walk away with that and try to take all the -- you know, maybe catch all the arrows yourself. Although we may have commonality of products, we haven’t seen the industry add significant capacity by anybody over the last year and with you giving 18% quarter over quarter growth and a similar number on year-over-year growth, it doesn’t seem we’re in an industry that could be positioned with a whole lot of excess supply. Am I looking at that wrong? David A. Wickersham: I’ll take a stab -- the answer is no. I mean, the good thing is as Brian has talked about, Charles and others, the good news is we continue to see exceptional growth and demand in both September and December year over year that’s very healthy. That too requires each of us to add capacity, both the vertically integrated as well as the non-vertically integrated and from my view, it’s similar from what you say in that I think people are being responsible in terms of adding both component and assembly capacity and I think that’s a good sign for the industry. Christian Schwab - Craig-Hallum Capital: So my last question to leave on is as we look at this company and your guidance for the September quarter, which is not disappointing in revenue but very disappointing in earnings, seems to be to use Mr. Watkins’ words, seems to be sloppy execution, sloppy qualification work, [inaudible] specific concerns and don’t be surprised if we don’t hear that the message is a little bit cheerier elsewhere? David A. Wickersham: I think we’ll take that as a comment and -- William D. Watkins: Yeah. We’re focused on what we have to go do, Christian, and we believe in what we’re doing and if we do that, we’re going to be fine. Christian Schwab - Craig-Hallum Capital: Perfect. One last question -- can you quantify the cost savings per drive on the next generation products? William D. Watkins: We’re not going to go down that path. Christian Schwab - Craig-Hallum Capital: Thank you. William D. Watkins: So in conclusion here, guys, I would like to address one organizational matter. As you likely know, Charles Pope has chosen to transition out of his role as Chief Financial Officer, a position that will pass to the very capable hands of Pat O’Malley. I would like to thank Charles for his many years of outstanding service as Seagate's CFO. Moving forward, as recently announced, Charles will assume the leadership responsibility for Seagate's services and he has also accepted the role of Executive Vice President Strategic Planning and corporate development, including mergers and acquisitions, and we look forward to his contribution going forward. With that, people, thank you and we’ll see you in the next call.