William Watkins – CEO Kurt Richards - Executive VP of Sales and Customer Service David Wickersham – Chief Operating Officer Patrick O'Malley – Chief Financial Officer, Executive VP Brian Dexheimer - Division President for Consumer Solutions

Steven Fox – Merrill Lynch Jason Noland – Robert W. Baird Sherri Scribner – Deutsche Bank David Bailey – Goldman Sachs Richard Kugele – Needham & Company Katie Huberty – Morgan Stanley Aaron Rakers – Wachovia Scott Craig – Bank of America Keith Bachman – Bank of Montreal Mark Moskowitz – J.P. Morgan Christian Schwab – Craig-Hallum

(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 Seagate as of the date of this conference call but are subject to a number of risks and 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 statement is contained in the company's annual report on Form 10-K as filed with the U.S. Securities and Exchange Commission on August 13, 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 over to our host, Mr. Bill Watkins, CEO.

On the phone with me are Dave Wickersham our President and Chief Operating Officer, Pat O'Malley, our Executive Vice President and Chief Financial Officer and Kurt Richards, our Executive Vice President of Sales and Customer Service. Brian Dexheimer, Division President for Consumer Solutions is also available to answer questions during our Q&A session. I'd like to start our call this afternoon by briefly reviewing where we've been over the last several months before outlining our current position and our outlook for the quarter ahead as well as our perspective on longer term trends. I will then turn the call over the Kurt, then Dave, and finally Pat who will cover in more detail our market, operating and financial results for the quarter. I'm pleased to report that the September quarter reflected the measurable progress towards our goal of regaining our long standing product leadership position across all markets. We were prime to market with a two disk 500 gigabyte notebook drive as well as the industry's first one and a half terabyte desktop drive. We launched a product refresh of our free agent line of external storage solutions with new innovations such as docking stations and the industry's highest capacity points. Additionally, we extended our portfolio of security products with Black Armor, the first portable hard drive with full disk encryption. Going forward we intend to continue to extend our gains across our entire product portfolio. Concurrent with improving of our product execution, we are devoting significant attention to reducing our cost structure. While we are beginning to see the fruit of this initial effort, much more is needed as the macro economic environment continues to be challenging. There is no question that the macro economic environment is challenging and could remain so for some time. But such an environment does present opportunities as well. Companies like Seagate that have a strong balance sheet, have the resources and flexibility to continue to make the technology investments and solidify product leadership. As we look ahead, we will remain disciplined and focused on the things we can control such as product leadership, cost and inventory management and technology leadership. We are operating from a position of strength and we know that our strategy will serve us well over the long term regardless of which direction our economy turns. Before turning it over to Kurt, let me leave you with one clear thought. We are as confident as we've ever been in the compelling long term trends that are the basis for the growing demand for storage solutions and our ability to convert that demand into superior and lasting value for our shareholders. With that, let me turn the call over to Kurt.

As Bill mentioned, our product portfolio improved significantly throughout the last quarter and we are seeing good initial traction from our customers. Specific to the September quarter, Seagate shipped 48 million units, up 11% from the prior quarter and up modestly a year ago quarter. We believe the overall industrial TAM was approximately 152 million units, up 15% quarter over quarter and 13% year over year. Seagate's share was essentially flat to modestly higher as compared to the June quarter in desktop, notebook, mission critical enterprise and DVR markets. However, in the gaming market we intentionally let our market share contract for at least the near term as the economics does not make sense. Pricing for the September quarter was in aggregate more competitive than we had planned and is reflective of the industry's ability to easily meet overall demand. Looking forward, we have limited visibility into the true demand of the December quarter due to the macro economic environment. Therefore, our outlook for the December quarter assumes muted seasonal unit growth of 3% above the September quarter which equates to approximately 156 million units. The pricing environment is expected to be essentially the same, very competitive with ample supply to meet demand. Given our leading product portfolio we do not intend to lose share in any of the markets that we participate. Now I'll give some details on the individual markets. In the mission critical enterprise space, the TAM in the September was approximately 8.1 million units. We believe Seagate grew its leadership position in the space during the quarter shipping 5.2 million units. Demand remains solid for the high capacity enterprise class SATA products and we believe Seagate maintained its leadership in the portion of the enterprise market. We believe that with the industry's broadest and most competitive enterprise product line, we are well positioned for long term success and leadership in this market. For the December quarter we are expecting the overall enterprise market demand to be down sequentially. The TAM for the desk top computer for the September quarter was approximately 65 million units. Seagate shipped an industry leading 28.2 million units during the quarter. For the December quarter we are expecting the desk top compute TAM to be flat or slightly down sequentially. In the consumer electronic applications we believe the industry TAM for the September quarter was approximately 21 million units. Seagate shipped 4.8 million units of which the vast majority was the DBR market. We received strong interest in our new line of pipeline HD products designed specifically for video dependent applications and have completed most of our OEM qualifications. This should provide us an opportunity for continued growth in the segment. We expect the overall CE market will experience a seasonal increase in unit demand in the December quarter mainly associated with gaming and hand held applications. With regards to the mobile compute market the overall TAM grew approximately 58 million units in the September quarter and Seagate shipped 9.8 million units. Our customers are giving us encouraging signs about our products and we believe this will lead to modest share gains in the space over the coming quarters. We are making progress in our customer qualifications with our leading time to market two disc 500 gigabyte notebook products including completion of two major OEM's qualifications early this month. We are also seeing good progress on our 7200 rpm notebook sales and we believe we are well positioned in this portion of the market as this portion of the market continues to grow. We expect to see continued gains in this fast growing mobile compute market. We expect the December quarter for the mobile compute market to exhibit seasonal increase in unit demand and be up from the September quarter. In the branded solutions, we are very encouraged with the positive feed back and acceptance of our new products. During the quarter we launched the newest line of free agent products featuring an innovative first in category docking design, five families of products in four colors supporting three types of connections to the Windows and Mac based systems. We also introduced the 500 gigabyte 2 1/2 inch, an industry leading first, 1.1 terabyte capacity points. We reduced inventory, expanded our global points of distribution. Going forward we expect improved performance in the context of the market conditions. Overall, we will remain focused on continued operational improvements and market expansion with our new consumer lines over the next few quarters. Now I'd like to turn the call over to Dave to provide an update on operations.

I will cover four topics with you today; our ongoing cost reduction efforts, capital, inventory and new products. First, let me give you an update of the actions we have taken to realign our media operations. As planned, in September we ceased production at both the finished media factory in Milpitas, California and the aluminum substrate factory in Limavady, Northern Ireland. The estimated annual cost savings is approximately $70 million and we expect to begin realizing savings during the December quarter. Additionally, on September 18, we announced the closing of our research facility in Pittsburg, Pennsylvania. The research effort currently underway in Pittsburg will be moved into existing facilities primarily in Minnesota and California. Moving the research resources closer to the design teams is expected to increase the speed, efficiency and leverage with which our research investments result in time to market products. Once fully realized, the annual savings related to the closure of the Pittsburg facility is expected to be approximately $30 million. We will continue to aggressively identify additional opportunities company wide that will improve our overall cost structure. These targeted actions are expected to increase efficiency and reduce spending while at the same time deliver leading time to the market products. Capital investment for the September quarter was $280 million slightly below our plan. As we look forward to the balance of the fiscal year, our investments will be targeted at technology advancements and cost reduction opportunities. Investments for additional capacity will be minimized as we essentially have capacity in place today which supports the expected volume requirements for the next several quarters. Consequently, we expect fiscal year 2009 capital investments to be approximately $750 million, a reduction of $250 million to our previous plan. I am pleased with our continued improvement in inventory management. In the September quarter, we increased turnover and achieved a reduction in total inventory as compared to the prior quarter. Inventory turns improved from 9.3 in June to 11 turns in September. Inventory decreased $36 million quarter over quarter from $945 million to $909 million. Finished goods declined $92 million while raw material and work in process increased $56 million. We remain focused on optimizing our inventory and improving our turns going forward including in the December quarter. In regards to new products, I am very excited about our progress across all product platforms. In the notebook market, we have launched the 5400 rpm 500 gigabyte notebook drive in volume production ahead of our internal schedule. In the September quarter, this product shipped to our branded business unit, into the distribution channel and initial revenue shipments with two OEM customers. Customer acceptance has been quite favorable as many of the OEM's are eager to complete qualification and begin volume shipments. Understandably our focus this quarter is to complete OEM qualifications and rapidly transition to this new product platform. With tremendous effort we have significantly closed the time to market gap that existed with the previous two 5400 rpm product generations and are committed regaining time to market leadership in the notebook market. In desktop, we were first to market with a 1.5 terabyte, 3 1/2 inch ATA drive. Customer acceptance has been robust and we were able to ship over 100,000 units during the September quarter. We expect to complete the balance of the qualifications in the December quarter and continue to ramp volume production. In the mission critical enterprise market, our 450 gigabyte 3 1/2 inch 15K product acceptance is progressing well, and most OEM qualifications are complete and the product is ramping. Additionally, our first to market 300 gigabyte small form factor drive is in OEM customer qualification and we expect to commence OEM shipments during the September quarter. The objective is unchanged. Clear, and sustain time to market leadership. And while we have made measurable progress during the last few quarters, we will remain focused on continuing to improve our product execution. Now I would like to turn the call over to Pat. Patrick O'Malley: You'll find the company's press release, 8-K and additional financial information related to Seagate's financial performance and other supplemental information in the investor section of Seagate's web site at seagate.com. Before I get into the financial results for the quarter and the outlook, let me first highlight for you a change in how we will be providing insight into the operating performance of the company. As you can see in this quarter's press release, we will no longer be providing a non-GAAP measure of net income or earnings per share. We made this change primarily to simplify our communications and to improve your view into how the company is performing and how we measure ourselves internally. As we report financial results we will highlight certain items that are impacting results such as but not limited to, acquisition related charges, amortizations of intangibles and restructuring related charges. Additionally, we will include any known and quantifiable events which provide our outlook for the next quarter. The supplemental financial information document we provide to investors contains a summary of those items we discussed along with additional information. With that, let's start with this quarter's results. Net income including earnings per share for the September quarter are $60 million and $0.12 respectively. Excluding items I'll detail in a moment, the results are consistent with the guidance we provided in July. Included in the financial results for the quarter are the following items: $20 million of purchase tangibles amortization and other charges associated with recently completed acquisitions and restructuring related charges of $51 million of which $23 million was reflected in the P&L on the restructuring line and $20 million reflected in the cost of goods sold relating to accelerated depreciation. The impact of these cash and non-cash items amounts to approximately $71 million and reduced diluted earnings per share in the aggregate of about $0.14 on a diluted basis. Slide 2 of the supplemental package has a summary of these items. For the September quarter, Seagate reported revenues of slightly more than $3 billion and unit shipments of approximately 48 million. Revenue and unit volume came in below our expectations and was the result of a more competitive price environment with 3 1/2 inch and 2 1/2 inch ATA products coupled with a lower total available market for 3 1/2 inch ATA products. During the quarter, Seagate remained focused on maintaining the supply demand balance. This is evidenced by our reduced finished goods inventory and less than five weeks of inventory on hand in the distribution channel of 3 1/2 inch ATA drives. Gross margin for the September quarter was $525 million or 17.3% of revenue. Gross margin was negatively impacted by $32 million most of which is accelerated depreciation expense related to the restructuring of our media operations. This had the effect of lowering gross margin as percent of revenue by roughly 100 basis points. Slide 5 of the supplemental package has a summary of these items. Gross margin as a percent of revenue was about as expected even with the more competitive pricing environment as we benefited from a favorable market mix, core enterprise as a total of planned and favorable rate costs and lower product return rates. R&D and SG&A costs were $408 million for the September quarter. Reported R&D and SG&A decreased by $18 million while other income and expense increased by a like amount relating to the accounting treatment of our employee funded deferred compensation plan. Let me explain how the accounting for the deferred compensation plan works. When the plan's liabilities decreased this quarter, a reduction was recorded in the operating expenses while a corresponding increase was recorded in the other income expense. The net impact is essentially neutral to the P&L. We will continue to identify additional opportunities to bring more efficiency into the R&D and SG&A groups to achieve our objective to properly align spending levels. The long term objective is to have R&D and SG&A spending represent approximately 11% of revenue. Cash flow from operations was $304 million for the September quarter while free cash flow was $24 million. Cash, cash equivalents and marketable securities ended the quarter at $1.15 million essentially flat from the previous quarter. Capital investment in the September quarter was $280 million. As Dave previously indicated, the current expectation for fiscal 2009 capital investments has been reduced to approximately $750 million. Depreciation and amortization for the September quarter was $253 million, up from the prior quarter due primarily to the accelerated depreciation charge of $28 million related to the closure of finished media operation in Milpitas. Amortization of purchased intangibles totaled approximately $17 million. During the September quarter the company did not repurchase any of its common shares. We believe it is prudent to be conservative in how we allocate our cash during this period of uncertainty stemming from the global macro economic situation. Our priorities are first to ensure we fund the capital and R&D investment required to achieve and maintain a clear time to market leadership position and funding ongoing restructuring activities that are vital to reducing our cost structure. Now for the December quarter outlook. Current near term uncertainty surrounding the global economy makes it particularly difficult to predict product demand and other related matters. With that in mind, our outlook assumes muted seasonal unit demand for the markets we serve and a very competitive pricing environment. As a reminder, the outlook includes all known and quantifiable charges as of today relating to past acquisition, amortization of intangibles and restructuring related costs. Additional information can be found on Slide 7 of the supplemental package. For the December quarter Seagate expects revenue to be in the range of $2.85 billion to $3.05 billion. GAAP diluted earnings per share is expected to be $0.12 to $0.16 and includes the following items; approximately $40 million of charges associated with completed acquisitions, $7 million of restructuring charges for previously announced restructuring activities and $7 million charged to Research and Development for accelerated depreciation of fixed assets at our Pittsburg facility. These items total $34 million and decrease earnings per share by approximately $0.07 on a diluted basis. R&D and SG&A expenses in total are expected to up compared to the September quarter due in part to the accelerated depreciation charge of $7 million, the October implementation of focal merit increases and as previously discussed, includes any impact related employee funded deferred compensation plan. Likewise, other income and expense is expected to decrease by a net expense of approximately $25 million. The annual tax rate is expected to be approximately 5% with variability from quarter to quarter. This outlook does not include the impact of any future mergers, acquisitions, dispositions or other business combinations, stock repurchases or potential new restructuring activities the company may undertake during the quarter.

Before we go to Q&A, just a couple more comments. I realize it is a little bit like onward through the fog today but to be honest, I feel better about the prospects of Seagate today, macro economic environment aside than I did back in June. The reason is, Kurt, Brian, Pat have laid out plans back in Q4 and what we're really seeing is measurable progress to those plans. Whether it's time to market, whether it's cost reductions, efficiencies, speed of decision, those things that we control and we measure, I'm feeling very confident that the teams are very focused on the opportunity ahead of us and what we have to do to achieve those opportunities. I'd like to emphasize that in the near term environment things are going to be a little bit cloudy but if we stay focused on what we can control, the product leadership, cost and inventory management and technology leadership, we are confident in the long term opportunities for storage. People continue to [inaudible] their life whether it's commercial or consumer, and we believe that we'll be well positioned when the economic environment improves, we'll be ready to take advantage of those opportunities. With that, we'll open the call for questions.

(Operator Instructions) Your first question comes from Steven Fox – Merrill Lynch Steven Fox – Merrill Lynch: Are you willing to talk about a gross margin guidance for the current quarter and secondly, I was wondering if you could talk in a little bit more detail, you mentioned a product refresh on the branded side. Can you talk about where you stand in terms of either share improvements or how you look at out into the December quarter from a {TAM} basis as well as your own market share prospects? Patrick O'Malley: Gross margin for the quarter given the range would be slightly sequentially up. We would not be hitting the range that we implied last quarter primarily due to accelerated pricing environment, unit demand, but it would be sequentially up probably less than 100 basis points from where we ended this quarter.

The way we feel about the branded business is that we've got a ways to go to full potential. Having said that, I think we made significant progress. We think we grew revenue fast in the market. We reduced inventory pretty significantly. We improved our channel and our product mix globally and lastly, we launched a new and extended line of products with the time to market capacity points for the first time in our history. Market acceptance of the new product line gives us reason to believe that we're going to continue to make progress. Steven Fox – Merrill Lynch: Any comment on the branded market as a whole given what's going on in the economy? Patrick O'Malley: I think it echo's Bill comments and you certainly read all the reports we have. I don't think we're operating in a different environment than those reports depict. I think if you look at what's going on in U.S. retail particularly, they're having some of the toughest times they've had in some people's accounts the last 30 years. I don't think we're immune from that. I will say our category tends to perform better than the standard even electronic superstores, the standard electronic products. For instance, high def TV's and products like that are actually performing more poorly than our category, but within the context of everybody's having a tough time. So we're not immune to that, but we are probably a shining star in a dark light.

Your next question comes from Jason Noland – Robert W. Baird. Jason Noland – Robert W. Baird: On a long term goal of 11% OpEx, does that include or exclude restructuring. Would we see that in fiscal '09 or is that a couple of years out? Patrick O'Malley: One is a couple of years out. We're targeting this year to try to exit the year sub 13% and that would exclude the restructuring charges related to that. I assume you're meaning the one time charges as opposed to the amortization and purchase intangibles. You're just talking about the SG&A and R&D. That's what that would be. 11% long term and that's probably a two to three year vision. We've working aggressively to hit that, and this year we're trying to exit the year sub 13%. Jason Noland – Robert W. Baird: Any update on solid state discs? Thoughts and strategy.

We're willing to bring solid state whenever it makes sense. We think the first practical place is in these pier zero architecture for enterprise and they will have a product out into next year. I think that capacity points before 40 gigabytes probably makes some sense in those applications but we think the cost per gigabyte play going forward will continue and the content the consumers and people want gets pushed off to where it's very viable to take a big percentage of it. We'll have a solid state drive in every market when it makes sense.

Your next question comes from Sherri Scribner – Deutsche Bank. Sherri Scribner – Deutsche Bank: On the last call you had mentioned that the gross margin would improve because you have the reduced component costs and the new products in the fourth quarter and it seems like pricing has essentially wiped out that gross margin improvement in December. Patrick O'Malley: I think pricing is probably the strongest headwind that we have. It's definitely harder than we planned. The September quarter continues to a higher level than planned and for sure historical in the December quarter. Plus also, given we're sequentially down in the enterprise market. We do have a lesser mix in that business next quarter, so you have a little bit of a mix model as well going on. So I'd characterize as pricing and somewhat of a market mix. Sherri Scribner – Deutsche Bank: In terms of the demand, the muted demand in the December quarter is that primarily a comment about desk top, because it seems like notebook demand has been pretty strong. Or do you also see that for the notebook market. Also in the notebook market, are you seeing a mix to lower capacities or lower demand for the higher capacity? What do you think now and for next quarter?

Primarily it's a desk top statement. There's obviously a little bit as we said on the enterprise, we are not seeing any real change in patterns from high Cap perspective. We're in the consumer season and we think that will stay strong.

Your next question comes from David Bailey – Goldman Sachs. David Bailey – Goldman Sachs: I'm wondering what could change the industry's trend toward overly aggressive pricing on the 2 1/2 drive now that all six players are roughly at the same point with technical perspective. Do you see any signs that anyone in the industry is actually willing to cut supply given the demand is getting weaker?

I think people came into September prepared for a bigger number back in June/July and I don't think any of us really know what's going to happen, what the consumers are going to do. I think from the pricing, I think we're looking at a 3% growth. I think it's prudent for us to be fairly with that sort of capacity out there, it's going to be fairly pricy. I think what's good is you have two companies who have operating models that they can be highly profitable and be profitable in these situations. And you have two companies that can't make money at all and so I think that's going to be restraint. How much money are people willing to lose before they shut it off? We've been through this many times, and one thing about the drive guys, we know how to live in this environment. We're optimistic in a kind of strange way, focus on the things that we can control. Make improvements and when we come out of this, we're going to be in better shape and we may catch a little cold, but some people will get pneumonia if this goes very long. Patrick O'Malley: I believe there's enough capacity to build more. So if you're concerned, I think people are more muting their bills based on what they see as demand not what capacity is out there. So I think everyone has started to align up the capacity to what they see as demand. I think people are pulling their heels back on the build, not necessarily on what they have capacity. There's more capacity in the market that what we see. David Bailey – Goldman Sachs: On the savings side, is there anything we should be looking for beyond the $100 million in annual savings that you talked about?

Pat already talked about OpEx. From a cost standpoint I think the answer is yes. We're going to continue to focus on first, our biggest leverage continues to be transition into new products and I think you've seen us get a healthy level of finished goods that also allows us to quickly transition to the new products. Our biggest cogs lever continues to be transition into new products. I'm very pleased about the qualification progress across all segments, across all products. That's our biggest level. Along with that of course, just becomes maturing products, better yields, lower costs. It's an ongoing focus. We're certainly looking at any and every opportunity to make sure that our cogs are as low as possible.

One of the issues that we have is actually an opportunity and really become what the engineering team is pushing hard is, in the last three quarters we have qualified a single disk 125 notebook, a single disk 160 notebook, now a single disk 250. We've gone through three notebook platforms and technically four in the last year. We've got to get our products, our qual back on our newest platform as we've kind of leaped ahead and kind of close this gap. So the big opportunity for us is to get everybody on the 250 single disk, two disk 500 platform and streamline that process, and there's real efficient opportunities there for us and we're very focused.

Your next question comes from Richard Kugele – Needham & Company. Richard Kugele – Needham & Company: On the mobile side, your unit growth was tremendous sequentially. Is this where your share always should have been and how we should look at that dramatic growth. If there's any color you could provide on where that went or whether we should be viewing it as more the market growth from this point forward?

I think the answer is our products are catching up with the market. We now have a leading set of products and I think last quarter was reflective of a like set of products. I think it's natural. As Bill said, our business model will deliver and we now have a set of products to go compete. Richard Kugele – Needham & Company: In terms of industry growth, obviously 3% well below any type of normal seasonality. Does this then change seasonality even heading into the first quarter? Are we going to have to do a rewrite of what seasonality will be in the next three to four quarters?

I think we need to be very cautious and very focused on what we can control. That's why I think the real emphasis on getting the products out there, having product leadership in this market. The share will go to the product leaders here. No one knows what's going to happen with the retail consumer or the consumer. It's a challenge right now. I think there's a lot of fear and uncertainty. That said, the longer term things are there. People need storage. It may be two quarters, it may be three, we're just not sure. But we're feeling pretty good about what we can control and that's where we need to stay focused because we'll come out of this. Richard Kugele – Needham & Company: Seagate was out of the public eye during the 2001, 2002 downturn. Can you just talk about how Seagate fared during that time and what the situation is different now for Seagate.

We used that opportunity to do the things we're doing now which is get our costs, time to market; if you look, we came out of that. We came out with product leadership across the board. One of the great opportunities for a technology company, when people want to hunker down, they get scared, they start cutting R&D, cutting things too much, they lose down. This is an opportunity for us to improve our product leadership, improve our cost reduction, our OpEx spending and do this in a way that when we come out of this, when the market comes back, we hope to be better positioned that we were coming into it. That's our expectations and that's our plan. I'm feeling good about the progress we've made. We're not there yet, but we're looking at this as an opportunity. Patrick O'Malley: We actually didn't grow any revenue in those periods of time, but we certainly grew our profitability. I think that's what Bill is echoing here. What we can do is transition products quicker, deliver time to market product, but focus on all areas of taking costs down in a world of uncertainty. I think that's the mode we're in and if there's upside to it that's all gravy. But we're going to operate in a very conservative mode on managing the balance sheet and managing costs in this business.

Your next call comes from Katie Huberty – Morgan Stanley Katie Huberty – Morgan Stanley: If we put demand visibility aside, which product segments do you feel are best positioned that you can take share in the December quarter? Patrick O'Malley: The notebook market. We feel very confident about the notebook market. I think also particularly this quarter going into the next we feel real confident about our desk top position on the 1 1/2 terabytes in the high cap. Maybe a third is our position on the enterprise at a 450 gigabyte. We think we're in a very strong position there also.

I really like the new products that Brian's brought. We expect pretty good results from what he's doing. Katie Huberty – Morgan Stanley: You did a good job of managing your own inventory and from the five weeks number you provided that looks okay as well. Where do you think industry channel inventory was end of September? Patrick O'Malley: We think it's definitely within range and probably the low end of the range if you look at it from a four to six week. It's on the low end of that range. People are not are not wanting to bring on a lot of stuff in this environment. The OEM's we provide the same business model. Things operate as normal there. We are relationship [inaudible]. We try to manage inventory tight on our side. The distribution channel is already been tight for two quarters plus given their capitalization models.

The OEM's at the end of September take inventories on because they really want a big October and November. They're really focused on getting their products out so they may be a little bit heavier. But that's part of the OEM plan. They want to make October happen big.

Your next question comes from Aaron Rakers – Wachovia. Aaron Rakers – Wachovia: Can you talk about the fact that this last quarter was a fourteen quarter and what that impact was within your model?

Historically speaking it really hasn't added a tremendous amount to our overall. From a demand perspective we really haven't seen a huge incremental difference. Aaron Rakers – Wachovia: Is it fair to say that there was some degree of incremental OpEx that that more than net net wasn't really offset by revenue in the last quarter? Patrick O'Malley: I think the way, especially OEM's they look at share awards. Distributors are making a lot of quarter end negotiations to line up on that 13th week and the next week they [inaudible] so I'd say the 14th week of revenue is very difficult if not impossible to measure, but we could certainly measure that 14th week of expenses. I would say that's a fair characterization. Aaron Rakers – Wachovia: As you ramp your 250 gig pro platter, 2 1/2 inch drives, you effectively take component cost out of the really sweet spot in the drive shipments in the market aside from just the 500 gig platform. Can you help me understand as that ramps to the December quarter how we should be thinking about the gross margin within that mobile business.

We don't give gross margins by segment. That is our single biggest lever. We've got two platforms as Bill mentioned, really on top of each other. One is 160 per platter. There are still some opportunities there to complete and ramp that and finish that off and then the second is the 250 per platter. So each of those will provide us incremental margin opportunity, but we just can't share those details. Aaron Rakers – Wachovia: How do you want the street to think about the earnings for the company? If I look back for example the June quarter, the street's at $0.44. That's exclusive of the restructuring charge. You guide exclusive of the restructuring charge. It's a little bit confusing how you want the street to gauge your bottom line earnings and in particular the tax rate within the model. Patrick O'Malley: What we want to do guide you to try to help you build a number to how we measure ourselves internally, how we're measured from our Board, how we believe we should be measured from you. We've tried to get away from this non-GAAP concept and let you build it so we certainly gave you the numbers in our supplemental to go build it from a GAAP basis and build it up to an operational basis. We believe we should be measured on the operational but we think given a GAP guidance, given that that's what's required, that's what people are going to pick up. We want to be more transparent on that and let you build to the operational. If you take a look where we talked about $0.12 this quarter in the GAP we say that's consistent with last quarter. We talked last quarter in the $0.21 to $0.22 range. I think that's how we want to be measured. We want to give you the measure to bridge that fairly transparently. On the tax, we generally like to look at that over a 5% to 6% range. That's what we believe our long term tax structure is. This quarter we had some discrete items that drove a favorable tax rate, tax expense. From time to time as statutes expire we have to run that through our P&L so you'll get that from time to time. We don't necessarily plan for that. So I think looking at our tax rate over the long term, 5% to 6% is probably a fair way to model us. Aaron Rakers – Wachovia: Where you would like to see the street thinking about the number for next quarter is more that $0.19 to $0.23 earnings range. Patrick O'Malley: I would think that's fair.

Your next question comes from Scott Craig – Bank of America. Scott Craig – Bank of America: Can you revisit the notebook expectation side of things> You mentioned modest share gain but it's clearly an area you've struggled over the last year so why would we only see modest share gain there as opposed to the more pronounced ones over the next couple of quarters?

We want to earn our share with product leadership, capacity points, quality. This is not about manufacturing leverage. We're going to grow our share responsible and we're going to take our share that's deserved through the products and we're willing to fight a cost game. We're going to be fairly methodical as we grow this and take our opportunities. We think with continued focus on product leadership and having the capacity points and/or the products or solutions customers want, we'll continue to grow share that way. That's a much more profitable way of doing it. Scott Craig – Bank of America: On the free cash flow, you gave us guidance last quarter for somewhere around break even. Any thoughts on how the free cash flow folds out over the December quarter? Patrick O'Malley: We're certainly looking to cut back on our capital expenditures. Obviously with an engine like that you don't stop it over night so there's going to be quite a few capital requirements coming through of that 750 next quarter. We'll certainly look to manage that. The other area that we're going to manage is on the balance sheet. You look at this quarter, we took 10 days out of our balance sheet for our cash conversion cycle. We're trying to maintain our cash levels at that $1 billion plus. We are committed to try to stay there. If we run at $800 million to $900 million I'm not going to be worried, but we're going to try to run the business at $1 billion.

Your next question comes from Keith Bachman – Bank of Montreal. Keith Bachman – Bank of Montreal: There's some recent chatter on some consolidation activities. How do you think about ongoing consolidation given the backdrop of what is pretty tough industry fundamentals. Do you see any potential changes there?

We've gone through these before. Usually depending how long, how aggressive this is, there's obviously a very different business models across the six competitors. There's two of us that probably has substantially different models than the other three. People who can't make money the last year are sure not going to make money in the next year. We think it puts tremendous pressure on some of these people that probably shouldn't be in the business. Our sense is that we focus on what we can control. It will probably be a consolidation play. It would make sense for a couple of the Japanese probably to get together. We don't understand Samsung's long term strategy and why they're spending the money they're doing. We feel that as bad as the environment is, we can be highly competitive against people in this environment and we'll come out of this stronger. Keith Bachman – Bank of Montreal: Do you think Hitachi is a consolidator?

I do believe there will be a Japanese consolidation.

Your next question comes from Mark Moskowitz – J.P. Morgan. Mark Moskowitz – J.P. Morgan: In terms of the general supply/demand dynamics, can you give us a little more context around the fall that you're talking about or shed some light in terms of what regions, what types of distributors versus OEM's have really slammed the breaks versus intimating all this doom and gloom anticipation?

It's not all slamming the breaks as much as...October's actually a pretty good month. Everyone's trying hard to make October happen November. What no one wants to guarantee me, people don't show up and buy notebooks and buy things then we may have a problem. Everyone kind of gives you the onward through the fog type of speech. That's kind of where we're at. That said, we're trying to be prudent. We think fairly flat quarter on quarter is the prudent way to look at this quarter and hopefully we have an upside that they do maintain. Nobody knows. If you look at the behavior right now, they're actually pushing quite hard. But there's three months in the quarter and we've been through this before. We've gone through these periods before and we know how these quarters lay out when we're in these times so we're just trying to be prudent and focused and come out of this right. Mark Moskowitz – J.P. Morgan: You're mindful of where you sit in the food chain. At this point if October is sustained and November and December hold up the same way, you may actually have some upside in the quarter.

If it wasn't for this macro we'd be looking at 10% numbers in all that. The whole macro thing has changed everybody and that's the problem. Nobody knows. There's some underlying things on the technology side that seem okay. But we're sure not going to be immune. It's time now to be prudent and be smart. Mark Moskowitz – J.P. Morgan: If the macro does become a bigger grind for your business, what do you think in terms of other types of incremental cost initiatives in terms of playing closing these days? What type of other leverage do you have at your hand?

We still have those levers of consolidation capacity and things like that. We're going to continue to work on our costs. We think we want to leave 13% off Ex spending. We can move that faster. And we're really being very prudent. We think there's a lot of inefficiencies that we can improve on, at the same time keeping as much pressure on the technology leadership part of our business. It's not about reducing our focus on technology. Between all the mergers, it's really leveraging and making more efficient our technology investment. We think we have a lot of opportunity there still. So we may move some of that faster. Some of the things that Dave was doing on the component side has opportunities on the component cost side. We can move more sub straits, more heads, more things like that. I think we've taken the obvious footprint actions that we need to take and I think going forward in terms of both OpEx and costs, one is we're looking at the structure within the U.S. in particular and how do we continue to streamline the organization to take advantage of the skill sets we have for both R&D and other talent in Asia. So those are the things we're looking at as opposed to what I'll call a footprint. However, having said that, we're going to keep an eye on. But we are going to need brick and mortar. We are going to need more units, more capacity down the road, so we're in this for the long run. Our next look is to continue to streamline and improve the efficiencies of the organizations we have. Mark Moskowitz – J.P. Morgan: We could see another consolidation event. Could you see a situation where if things do get really difficult or trying over the next few quarters and given your cash position relative to some of the foreign players, could you see a situation where the U.S. guys decide rather than driving consolidation through an acquisition, we just push people out of the market through price?

Price wars – you don't drive people out. It would be senseless for me to think I could drive Hitachi or Toshiba or Samsung out of business on price. These guys will make their decisions. We just don't believe in price wars. We believe this is about product executions, product leadership. It's about getting the customers solutions. We think we've made big leaps getting there and we're sticking to our model which is about product leadership, time to market with the opportunities that presents. The pricing thing doesn't work.

Your final question comes from Christian Schwab – Craig-Hallum. Christian Schwab – Craig-Hallum: I would assume that the dividend is not at risk? Patrick O'Malley: No the dividend is not at risk. Right now there's no discussion about changing the dividend. Christian Schwab – Craig-Hallum: On heads, can you verify your strategy again between yours and TDK. I would assume that you're using your own heads on all of your notebook products.

Nothing has changed. Seagate heads will be in all of our products and TDK will be, I'll call it surgically, we're going to use them similar to our media model. That hasn't changed. The only thing that's changed is we started to ramp TDK. It will be 100% of representation of our HO in every drive and then it will be limited and surgical use of TDK and that's something that we're going to work out with them program to program generation and decide where we slot them. We've also agreed that we won't be specific in that regard. Christian Schwab – Craig-Hallum: On the OpEx side, you've mentioned the 11% goal. It appears that you're realistic that you're not going to get there by revenue growth in the near term. Can you give us any ideas of when in a general time frame? That a lot of people that are going to need to let go. Patrick O'Malley: 13%, if you take a look at historical revenue profiles, obviously you could model what you want but it would be a very tight year. We've already announced the Pittsburg. We continuing to look at activities because the only way you're going to get down to that level, 13% is excluding costs from the business. We under that process today. We're going through that. That's not going to be a quarterly process. That's going to be an ongoing process that's going to take this quarter. It's going to take next quarter. For a period of time we may have quarter to quarter announcements on these. It may be many as opposed to just one. I think that's how you would characterize that activities that you'll see. We talked about a two to three year plan on getting to 11%. I think Bill would certainly see how we do it quicker, but the one thing we're committed to is not to sacrifice our product leadership, our technology leadership. We remain committed to that, and that for most parts will be investments where we need those. Christian Schwab – Craig-Hallum: You think there's five weeks of inventory for the industry in the 3 1/2 inch side of the distribution channel? Patrick O'Malley: The industry might be slightly higher, but typically it's right around four for the industry. Christian Schwab – Craig-Hallum: The 2 1/2 inch 500 gigabyte free agent product, is that 100% your disc drive in it today?

Today it is but the first shipments were mixed. We had agreed that we were going to go into this Christmas with 500. We saw the three disc versions and we bought 15,000 to 20,000 back in April from a competitor that we put into the retail box. Our own plan for 500 was more like an October/November and Dave and team just pulled in it, so we actually shipped in September into retail our own two disc versions. Christian Schwab – Craig-Hallum: So you're not buying any from Samsung anymore?

No we had a one shot buy. We stopped that in September. Christian Schwab – Craig-Hallum: When you look at the enterprise price market demand, are there any distinctions that you're seeing in the market place between the traditional 10 and 15 K market versus the enterprise SADA market?

I wouldn't think there's measurable change between them. There's still strong demand at the business critical space and other that what we've got in front of us for this quarter. 2 1/2 inch is probably on path of what we thought it would do from getting into the 3 1/2 inch space, but no radical changes. Christian Schwab – Craig-Hallum: But enterprise in the small foreign factor is still growing significantly.

Absolutely.

That's the end of the call. Everybody hang in there.