Stephen J. Luczo - Chairman of the Board, Chief Executive Officer and President Robert Whitmore - Chief Operating Officer Patrick O'Malley – Chief Financial Officer, Executive Vice President Brian Dexheimer - Division President for Consumer Solutions Kurt Richards - Executive Vice President of Sales and Customer Service

Richard Kugele - Needham & Company Min Park - Goldman Sachs Sherri Scribner - Deutsche Bank Securities Mike Lanier - AIG Amit Daryanani - RBC Capital Markets [Unidentified Analyst] - Bank of Montreal

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Seagate Technology's fiscal second quarter 2009 preliminary 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, including any references to the savings we may achieve under our recently announced cost reduction plan as well as impact of the impairment charges we may take with regard to our goodwill and other long-lived assets, are based upon information available to Seagate as of the date of this conference call, but are subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated by these forward-looking statements. Information concerning additional factors that could cause results to differ materially from those projected in the forward-looking statements is contained in the company's annual report on Form 10-K as filed with the U.S. Securities and Exchange Commission on August 13, 2008 and in the company's quarterly report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on October 30, 2008. These forward-looking statements should not be relied upon as representing the company's views as of any subsequent date and Seagate undertakes no obligation to 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, Steve Luczo, CEO. Please go ahead. Stephen J. Luczo: Thank you, [Wesley]. Good afternoon, everyone, and thank you for joining us today. On the call with me are Pat O'Malley, our Chief Financial Officer, Bob Whitmore, who heads R&D and manufacturing operations, Brian Dexheimer, head of our Consumer Solutions Division, and Kurt Richards, head of our Global Sales. Before we get to results of the second quarter, I'd like to take a few minutes to discuss some of the announcements we've made over the past couple of weeks, as well as to discuss the challenges posed by the current business environment. I'll then give you my perspective on our business going forward before turning the call over to Bob and Pat. We are currently experiencing one of the most dramatic economic downturns of our generation. Macroeconomic trends are worse than what anyone expected even just a few months ago. While we continue to firmly believe that Seagate has a solid future and we view the long-term prospects for storage to be positive, there are significant short-term challenges facing Seagate. Companies of all types, regardless of size or industry, are being negatively impacted by this global downturn, and most of these businesses, large and small, are significant consumers of storage and therefore of Seagate's products. Due to the ever-changing and declining economic environment, the Board determined that now is the appropriate time to make changes in the leadership team, to facilitate quicker changes in organizational structure and to implement other actions to regain our position as the leading provider of storage devices across all markets. The entire Board and the management team have the highest regard for Bill Watkins and for his many contributions to Seagate. Bill's advice and his efforts to ensure a smooth transition are much appreciated and will help us in this acceleration of change. We also announced last week that Dave Wickersham has resigned from the company as President and COO. Bob Whitmore has assumed the additional operational responsibilities previously performed by Dave. Bob has been with Seagate for 22 years and is an important member of our leadership team. In his expanded role he is now responsible for all research and development and global disc storage operations. I am pleased that Bob will assume these additional duties in his role going forward. I will now briefly review the restructuring program that was announced last week. In fiscal 2006 Seagate began an expansion program to meet rising customer demand. In recent months, however, the market has contracted sharply, and when combined with some market share loss, revenues have declined significantly. In order to adapt our business model to the new economic conditions, we have implemented a series of necessary changes. In early fiscal 2008, Seagate commenced a restructuring program that to date includes the closure of our recording media facilities in Milpitas, California and Limavady, Northern Ireland, and the announcement of the closure of our research facility in Pittsburgh, Pennsylvania. Recent actions also include a reduction in our global work force, company wide salary reductions, and other cost reduction actions that we believe will result in annual savings in excess of $300 million. These actions are part of a comprehensive plan to align the company's cost structure with the current economic reality. Pat will be addressing this in more detail later in the call. We continue to remain focused on building liquidity and strengthening our balance sheet by taking actions to reduce capital spending, lower operating expenses, and to align production with demand to control inventory at appropriate levels. Today we also announced that the Board voted to reduce the quarterly dividend to $0.03 per share effective immediately. Reducing the dividend is expected to save approximately $175 million of cash over the next 12 months. Let me spend a few minutes talking about my perspective on our business. We understand that the issues we are facing today are not solely the result of macroeconomic pressures. I believe we have the right resources in place, but that we haven't executed at the level that we are capable of. After demonstrating sustained areal density leadership through a number of product generations, we decided to manage areal density growth in an attempt to optimize our product portfolio and R&D investment. This decision resulted in products that were less competitive in some markets, as overhead technologies advanced at rates greater than our estimates. Our technology assets, investments and capabilities remain intact, but we have not been efficient in deploying those technologies through the last two product cycles. In addition, our internal execution issues were compounded by the macroeconomic environment, which we believe will continue to be challenging through calendar 2009 and potentially into the first half of calendar 2010. Moving forward we need to optimize our leadership systems for faster decision-making and we need to increase the competitiveness and value of our product portfolio by better capitalizing on our core technologies. We will continue to adjust production to a level in line with our current estimates of the total available market. We will continue to structure our business to focus on building liquidity and strengthening the balance sheet so that we are competitive throughout a period that may reflect extended macroeconomic decline. To the extent that business conditions are more favorable than what we currently anticipate, we can scale reasonably to address growth. We believe a positive change in the economy will be gradual and that we have the right relationships with those customers that are positioned to see an economic upturn earliest. We believe that Seagate has a solid future. We need to make smarter and faster decisions and execute better and we will. We are committed to implementing actions that will result in Seagate being the clear leader in storage devices across all markets, providing our customers with the industry's leading technology, highest performance and highest quality products, and using our scale and technology to be the most advanced and lowest-cost manufacturer in the industry. Seagate has achieved and sustained this level of performance before and we believe we can attain it again as we re-focus on advancing areal density and accelerating deployment of our technology into our manufacturing base. Efforts along this line have started to produce positive results. Six months ago we began addressing the issues associated with our product and technology portfolio as well as the company's structure. We've built positive momentum in recent months, providing us with significant opportunities moving forward. Bob will address these improvements in more detail in a few minutes. The current environment certainly presents challenges, but as historically demonstrated, the fundamental core strengths that Seagate possesses when fully leveraged result in the company's leadership in technology, products, cost and financial performance. We are confident in our ability to execute at these leadership levels as we continue our efforts for improvement. I'll now turn the call over to Bob, who will highlight some of our product initiatives, technology and operations.

Thanks, Steve. Before I provide you with an update on our products, technology and operations, I'd like to give you a brief background of my career and my perspective on the company's technology and operational priorities as we move forward. I started my career with Seagate over 20 years ago as an engineer within the Enterprise side of the business. Most recently I've been focused on product development, but through the years I've led nearly every R&D organization and many of the operational teams throughout the company, including management positions at our operations in Asia. I also know from my overall experience at Seagate that our greatest asset is our people, and I have a clear understanding of their capabilities and dedication. Having engaged with the global operations team, I believe we continue to be well positioned with advanced, low-cost manufacturing technologies, and I'm excited about the opportunity to lead this part of the business. I'll now provide an update of our products and technology, followed by an outlook of our capital spending. We have not been satisfied with the consistency of our product and technology execution. We recognized this several quarters ago and have been addressing it directly. Today I'm encouraged to say that we're making measurable progress to that end. Specific to areal density leadership, our accelerated plans to deliver the industry's highest capacity per platter drives are starting to show tangible results. Last month we successfully launched the industry's first 7200 rpm 500 gigabyte per platter 3.5 inch product. Both desktop and CE versions are now released and being qualified. Additionally, our 5400 rpm 250 gigabyte per platter 2.5 inch drives have been shipping in volume for over a quarter and match the leading capacities in the industry today. We have also launched our 7200 rpm model at 250 gigabytes per platter. Finally, in the Enterprise market we have now completed the refresh of our 2.5 inch product line, doubling capacity to 300 gigabytes. All major OEM qualifications are now complete. Overall, we are making progress with our new product introductions; however, simply being at par with our competitors is not our goal. Our goal is to be the clear leader in areal density and product performance, and with these recent successes, we feel we are making progress across the entire portfolio. The product advancements we have made over the last six months are allowing us to recapture qualification positions with some of our key OEMs. This is a significant step in recovering our product leadership and growing market share. In the Enterprise market we remain the leader, and I'm encouraged with our current road map and position. This road map includes the commitment to solid state devices. We are set to deliver our first SSD product into Enterprise applications later this calendar year. SSDs and solid state technology are essential to our long-term product roadmaps, and we will maintain our investment levels to deliver leading technology as required by our current and future customers. Now I'd like to address our capital spend for fiscal 2009 and fiscal 2010. Capital investments for December quarter were $214 million. Looking forward, for the balance of this fiscal year our level of capital spending will be greatly reduced as we have completed most of our head wafer conversion from 6 inch to the most cost effective 8 inch format. We continue to minimize our capital spending in line with the reduction we see in demand and the installed capacity we currently have in place. Capital investment going forward will be targeted primarily at technology transitions. We expect capital investment for fiscal year 2009 to be approximately $650 million, a reduction of approximately $350 million from the outlook at the beginning of this fiscal year and $100 million reduced from the capital outlook we provided last quarter. Based on our perspective of the macroeconomic trends, we believe our capital investments for fiscal year 2010 will be below $500 million. In summary, clear and sustained time to market, product leadership, superior quality, and world class manufacturing are the key areas of focus for my organization. Seagate's foundation is solid, and I am fully confident in the talent and capability of our employees. Our goal is deliver sustained leadership by leveraging our technology and manufacturing capabilities across all markets. Now I'd like to turn the call over to our CFO, Pat O'Malley. Patrick O'Malley: Thanks, Bob. 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 Relations sections of Seagate's website at Seagate.com. First let me provide some insight into how the industry's demand and pricing environment evolved during the quarter. The December quarter proved to be very challenging with industry demand degrading throughout the quarter. When the December quarter began, the total available market or TAM for hard drives was thought to be near 156 million units. Then at about 8 weeks into the quarter, the TAM was expected to be in the 135 million unit range. And now preliminary industry data indicates actual shipments for December quarter were somewhere around 123 million units. With this type of demand and supply imbalance, pricing was very competitive, especially in the 3.5 inch and 2.5 inch ATA markets, where we believe the industry experienced a second consecutive quarter of double-digit like-for-like price declines. Now I'd like to discuss Seagate's preliminary financial results for the December quarter. These financial results are preliminary as the company has concluded that it is required to record a noncash impairment charge to reduce the carrying value of the company's goodwill and possibly other long-lived assets, which include purchased intangibles and property, equipment, and leasehold improvements. The financial statements that will be included in the Form 10-Q that will be filed by the company for its fiscal second quarter of 2009 will differ from those issued today so as to reflect the outcome of this impairment analysis and any related tax impact. Seagate reported a net loss and a net loss per share for the December quarter of $496 million and $1.02 per share, respectively. Included in these results are the following items: $18 million of purchased intangibles amortization and other charges associated with acquisitions; $94 million of restructuring related charges, and A $271 million charge to reduce the valuation allowance related to the company's deferred tax assets. The impact of these cash and non-cash items total approximately $383 million and approximately $0.79 per share. Note that the adjustment to the valuation allowance of deferred tax assets will not impact our cash taxes paid going forward. For the December quarter, Seagate reported revenue of $2.3 billion, at the low end of our revised guidance, reflecting the project execution issues which we have previously mentioned, the continued softening in demand, and inventory drawdown throughout the PC supply chain and the more competitive pricing environment for the 3.5 inch and 2.5 inch ATA markets. Seagate unit shipments for the quarter were 36.7 million, down 23% compared to the prior quarter. In the December quarter we believe we lost approximately 2 points of market share. The factors that contributed to this are the continued transition of demand from 3.5 inch ATA to 2.5 inch ATA, where Seagate has meaningfully less market share, we chose not to participate in specific portions of the 3.5 inch market, and within the 2.5 inch ATA market, while our time to market 250 gig per platter product offerings continue to gain share and customers, the older product platform ceded share as our customers cut demand from the last supplier qualified, which was Seagate, before impacting those who were more timely to market. Gross margins for the December quarter compressed in excess of 300 basis points, which reflected a more competitive pricing environment, lower unit demand leading to low levels of fixed cost absorption as we reduced build schedules significantly, and a higher cost structure on older products as Seagate continues to transition to newer, more cost-efficient product platforms. R&D and SG&A totaled $377 million for the December quarter and included costs related to the acquisitions of $2 million and accelerated depreciation of $14 million related to our closing of the Pittsburgh research center. In addition to tight spending controls, similar to last quarter, R&D and SG&A was lower than planned due to the accounting treatment of the company's employee funded deferred compensation plan. As the plan's liabilities decreased again this quarter, a reduction was recorded in operating expenses while a corresponding increase was recorded in other income and expense. The net impact is essentially neutral to the P&L. Let me recap some information relating to the restructuring and cost saving actions disclosed by the company last week. First, the work force reduction totaled approximately 3,000 headcount and is expected to save $130 million annually. We will see the majority of this benefit in the June quarter. The expected restructuring charge for this action is approximately $90 million and is mostly for cash-based severance costs. Secondly, a salary reduction was enacted for nearly all professional employees on a sliding scale that is expected to save an additional $80 million annually. A portion of these savings will be reflected in our March quarter results. In addition to these actions, we recently completed the shutdown of the finish media operations in Milpitas and the aluminum substrate operations in Limavady, Northern Ireland. We are well into the plan that is expected to improve the efficiency of our research effort by moving much of the activity into existing product and component design centers, enabling Seagate to exit the Pittsburgh research facility. These restructuring actions I just mentioned are expected to eliminate in excess of $300 million of spending from the overall cost structure. Additional cost savings outside the scope of these restructuring activities have been identified and have been enacted by the management team and are expected to significantly lower the cost structure of the company. Specifically, for product development and selling, general and administrative based on the actions implemented to date, our quarterly run rate spending level is expected to be approximately $340 million when full savings are realized in the June quarter. While the savings to date are significant, the management team will continue to evaluate and determine what further actions are necessary to properly align the company's cost structure with the current business environment. Now I will discuss the balance sheet, cash, cash flow and liquidity. Cash, cash equivalents and short-term investments ended the quarter at $1.3 billion, up $156 million from the previous quarter. During the quarter, the company borrowed $350 million under the existing revolving credit facility. The Board's authorization of the reduction to our dividend mentioned earlier will improve our liquidity position. Going forward, the management team will continue to monitor the company's liquidity position and determine how to best prioritize the use of cash so as to position the company for long-term success. Cash flow from operations was $89 million for the quarter while free cash flow, defined as cash from operations less capital expenditures, was negative $125 million. Depreciation and amortization for the December quarter was $228 million, including approximately $16 million of purchased intangibles amortization and $16 million for accelerated depreciation related to fixed assets at facilities we previously announced were closing. Investments in capital for the first two quarters of fiscal 2009 totaled $494 million. The current expectation for fiscal 2009 capital investments has been reduced to approximately $650 million. Looking forward, Seagate's capital investments will primarily be targeted at advancing technology and, as such, can likely be supported with an annual run rate of an amount less than $500 million. Cash conversion metrics are as follows - days sales outstanding was 42, days payable outstanding was 64, and days inventory outstanding was 37, for a cash conversion cycle of 15 days, which was 10 days longer than the prior quarter. Our target for the cash conversion cycle is 12 to 15 days. Since we are at the high end of the target range, we expect no further incremental cash to be tied up on the balance sheet in the future due to working capital requirements. Inventory decreased in aggregate by $113 million as a $152 million decrease in work in progress and raw materials more than offset a $39 million increase in finished goods. Distribution channel inventory for Seagate 3.5 inch ATA product trended down the entire quarter and ended under 4 weeks. We believe all channels, including OEM and retail, brought down inventories during the December quarter. We expect the March quarter will be much more sensitive to true end demand as inventory buffer has been reduced significantly. Long and short-term debt totaled $2.4 billion, yielding a net debt position of roughly $1 billion. Long-term debt maturities in the near term primarily consist of $300 million due in October of 2009 and $135 million due in April of 2010. The revolving credit facility has a six-month maturity with the company's option to extend the borrowing as long as covenant compliance is maintained through the maturity date in 2011. In regards to the company's liquidity position, management has recently taken many actions focused on building liquidity and strengthening its balance sheet. We continue to be in compliance with the covenants related to our revolving credit facility, and based on the current business outlook, we believe the company will generate or obtain sufficient sources of liquidity to support the business. The covenant calculations have been added to our supplemental package and can be found on Page 10. Now let me cover the business outlook. For the March quarter, in light of the company's view of the current market environment and the uncertainty in global economic conditions, for planning purposes the company's expects the overall demand for disc drives to be approximately 110 million units and the pricing environment to be similar in nature to the past six months. In addition, the company is assuming no significant changes in its market share and therefore expects revenue to be approximately $1.6 to $2 billion. Gross margins for the March quarter are expected to come under further pressure due to the competitive pricing environment and the cost inefficiencies due to lower volumes and higher component costs. Product development and SG&A are expected to be approximately $395 million in the March quarter, essentially flat compared to the December quarter, when adjusted for the favorable impact from the employee deferred compensation plan. While current uncertainty and global economic conditions make it particularly difficult to predict product demand, the company expects TAM in the June quarter to be flat to slightly down quarter-over-quarter. Seagate has the potential to experience modest market share gains in the June quarter as our new products qualify and ramp in volume. In addition to a better cost structure on these new products as well as the full quarter benefit of the restructuring and salary reductions recently undertaken, the company expects to realize margin improvement in the June quarter. That concludes my remarks for today. Steve? Stephen J. Luczo: Thanks, Pat. And before going to Q&A I want to emphasize that in this challenging near-term environment, we will stay focused on what we can control - product leadership, cost and inventory management, and technology leadership. As always, my greatest confidence is in our employee base. Before we go to Q&A, I'd like to indicate that Pat, Kurt, Brian and Bob will likely answer most questions that reference our fiscal Q2 results due to my recent appointment as CEO, and with respect to the future direction of the company, our comments will be reflective of the entire management team. Thank you.

(Operator Instructions) Your first question comes from Richard Kugele - Needham & Company. Richard Kugele - Needham & Company: First, just tactically in terms of the quarter, can you talk about what you've actually seen from a pricing perspective quarter to date? You talked about some of the OEM aspects of it being similar, but there's been some indications of some stabilization in the channel due to the low inventory levels. Can you corroborate any of that? Stephen J. Luczo: Yes, Rich, let me just give you a high level remark just so we make sure that people got the message. What we're planning for against this economic environment is a pricing scenario that is not that different from what we've experienced. Now, as you know, over the last several quarters, this has been the steepest and longest period of pricing decline that the industry has seen maybe ever and certainly in a long, long time, and basic economics would say that that can't sustain itself forever. But for planning purposes, we need to be prepared. To your comments about what's recently happened, there is some indications in some marketplaces that the pricing has slowed. For competitive reasons we don't want to go into the details which markets exactly, but it's actually been in several different markets and covers both OEM as well as other channels. Richard Kugele - Needham & Company: And then I guess secondly from a total cost perspective, when you're looking at the future things you can do, I know you have a couple of facilities in China, you have a number of different R&D facilities, do you see it being more facility oriented or do you think that there's also some streamlining even within just your headcount that can occur. Stephen J. Luczo: Yes, I think, you know, again, it's partly based on what the business model that we drive to and what's the revenue model that we drive to. And in this demand environment and in this macro environment, it's tough to pick a number to say how do you want to structure your business for the long term versus the fact that the next 24 months could potentially be quite difficult and I think most people would agree that the next 12 are certainly not going to be fun. So those are the levers that we have to play with that you identified, you know, what we do with our structural infrastructure. The factories are actually for the most part running quite efficiently. Is there opportunities potentially? But for sure I think with respect to some of the organizational issues, as you're probably aware, the org structure changed to a business unit structure. We're now shifting it back to a functional structure, and we do believe there's opportunities in terms of both management layers, ability to delegate and restructure, that there are some opportunities certainly to pursue there. And longer term structural issues, as you mentioned, whether or not it's any facility, design related or factory related, have to be assessed in terms of the overall outlook. Richard Kugele - Needham & Company: Okay, I guess, Steve, one last question. If you were to compare Seagate's issues today, the market issues, compared to 1998 and the issues you were facing then, any thoughts on how you would approach it or how you were able to solve it then versus today? Stephen J. Luczo: Yes, I think the basic issues - or at least the manifestation of the issues - are very similar in terms of technology leadership that was lagging, execution issues, and high cost. I think those elements are the same. I think some of the things that have been driving those issues are similar and some of them are different. I think the good news today is one, there's a team in place for the most part that was actually the team that turned around the company the last time. As you probably recall, we had, I think, 111,000 employees when I was made CEO last time and I think it was 17 factories, 7 design centers, and over the course of four years we aligned the company to the business opportunity that we had and, more importantly, really invested in the technology and our heads and our discs and also integrated our design centers to a platform strategy where we could actually leverage all of our components and also therefore leverage our manufacturing assets in terms of final drive assembly. I think the good news is all that work is still here functioning and it's actually functioning quite well. As we mentioned, we did get behind in head technology. Last time we didn't have luxury to get behind because we were so far behind IBM, we just went pedal to the metal for as long as we could, and my assumption still is that if IBM hadn't shifted away from being a hardware company to a software company, we might not have ever caught them. But once they did that, we flew past them like they were standing still. With the areal density leadership that we had, we basically then in some ways had the luxury to say how do we deploy that areal density and how do we manage that growth, and the company pursued what I believe is a sound strategy of pursuing many more markets that were evolving for storage, whether or not it was consumer related or smaller devices or whatever, and in doing so we basically managed the areal density growth instead of just driving it as absolutely hard as necessary. Throw in there the fact that the 80 gig platform stayed in the market for basically two product cycles, which was the first time since 1995 that a product cycle had been less than a year, and the product planning basically missed a generation as a result of that because, again, of course, the product cycles picked back up again. Those issues are all pretty much the same. I think shifting the organization back to functional organization is obviously something we didn't have to face then, but I think there's opportunities related to that in terms of the decision-making that we'll have. The culture of the employees is as good as ever, so that strength is similar. I'm 10 years older. I'm not sure if that's a good thing or a bad thing, but I'm definitely 10 years old. And of course the macro environment is completely different, and I think the challenge that we have in front of us isn't really so much can Seagate do this, because we can do it and we know how to do it. What we really have to prepare for the company, though, is for the uncertain macroeconomic environment. If we had clear view on a steady state environment, I would say the risks were much less than they were in 1997. But in an environment that really it's hard to pick that point of what's the right revenue level, what's the right pricing level, what's the right margin level - and that being driven by external factors that, frankly, no one in the world is having a decent assessment of right now - certainly makes it a more complex challenge for all of us. We're up for the task. We're going to basically move forward in a way that we believe is conservative in those assumptions, but preparing the company in the event that the turnaround happens that we can obviously take advantage of any upside reasonably. We've given you our indication of what the TAM looks like for us going forward. We don't think that as you go to industry sources that there's going to be a wide variation of that. And again, then it gets back down to pricing, you know, how long do people continue to price or does the industry price itself into an unprofitable territory and obviously basic economics limit that at some point.

Your next question comes from Min Park - Goldman Sachs. Min Park - Goldman Sachs: First, Seagate and Western Dig have both made public comments and have started to cut back on capacity. Have you seen any signs or other indications from your other competitors that they're willing to or are planning to take capacity out of the system. Stephen J. Luczo: That's a great question. I don't know that we could say we have anything [inaudible] public confirmation, but I think everybody's appearing to be responsible with all the macroeconomic things we're dealing with at the time. Patrick O'Malley: I think the other things that you're getting is obviously it's, as you said, public comments from WD. I think we're approaching it reasonable to say what is the TAM? It clearly has contracted. We're trying to align our business model to support that, which we think, as Steve said, we can take that down and reasonably take it up. But with just the press coming out of Japan with potential consolidations and all the needs to get efficiencies, there's no doubt that they're looking at - when we look at some of the shared equipment suppliers, where they're cutting back, I think it's a whole supply chain just pulling back to align with this new reality of our customers may be willing to hold less inventory and of a smaller TAM for the time being. So I think it's not unreasonable to think that everyone's doing that right now. Min Park - Goldman Sachs: And then just jumping right into the supply chain, if you look at a number of the vendors in the supply chain, including component and capital equipment vendors, already seem pretty stressed in the current cycle. Are you concerned about the viability of your suppliers and what plans do you have in place to protect Seagate from that risk?

We are concerned and obviously we're watching it very closely and very carefully. We're talking to our suppliers every day and making sure that we're working with them. And I think it really comes down to a supplier-to-supplier case-by-case basis. We don't divulge any specific information on specific suppliers, but suffice it to say it's a big concern and we're working with them daily. Stephen J. Luczo: And just to follow up on that, you know there is no supplier issue that we are concerned about currently and for most if not all of our technologies we have more than one source of supply.

Your next question comes from Sherri Scribner - Deutsche Bank Securities. Sherri Scribner - Deutsche Bank Securities: I just wanted to dig into the cash levels a little bit. I was a little bit surprised to see that you drew down on the revolver $350 million. Was there a particular reason that you did that? I know at the time you had mentioned some cash costs related to restructuring, but it seems like those cash costs are somewhere around maybe $100 million and not really the $350 million, so I wanted to understand that a little bit better. Patrick O'Malley: As we've talked about, the $90 million was what I'd say was a first pass. We continue to look at the levels of our cost structure. There may be more, to fund those. But that work is undergoing, so we want to have enough in there to give us leeway to fund the restructuring. As we talked about, the $90 million, that $130 million pays off annually, but it does pay off annually, so if we have any of these other activities, many of them we'll have to have the cash upfront and they'll take a stream of anywhere from six months to a year to get back, so we want to draw that in front of us so we can be very aggressive if need be, if the market conditions continue to deteriorate. Sherri Scribner - Deutsche Bank Securities: I guess some of the questions I've had from investors have been you've got a lot of cash on the balance sheet. Is that cash accessible or is it in places that potentially you don't want to get at it for tax reasons or whatever and maybe that would be why you wanted to take the cash out of your revolver instead of using cash on the balance sheet? Just trying to get a better understanding of where your cash is sitting right now. Stephen J. Luczo: No, all of our cash is totally accessible. Sherri Scribner - Deutsche Bank Securities: And then in terms of the $15 million that's sort of - you don't have it this quarter, but you're seeing it again next quarter for the employee benefit stuff that's in the OPEX number, Pat, I'm just curious why would we necessarily have that $15 million in the number next quarter? I'm just trying to understand that charge a little bit and trying to figure out on a go forward basis - Patrick O'Malley: Okay, let me help you on that, Sherri. We took a - it was closer to $20 million credit into our comp charge. We're saying we're not going to get that benefit next quarter, so it's not a charge. It's just I'm not going to get that favorable benefit this quarter. So that $377, if you took the favorable benefit of the employee deferred comp plan, I'd have been closer to $400 million. So I'm basically telegraphing you $395 for next quarter, so essentially flat. Sherri Scribner - Deutsche Bank Securities: Okay. And then we go into June, I think you said with the longer-term plan and the restructuring actions you've taken, that comes down to $340? Patrick O'Malley: That's correct. Sherri Scribner - Deutsche Bank Securities: And so that includes those changes and so we wouldn't expect to see another number in there or a different change? Patrick O'Malley: Given current course, there would be no changes. If there was other activities that we enacted, you may have some effect to that, but $340 would be our steady state after the restructuring activity, reduction of all the other salary actions we talked about. So that would be what we expect to see, and if the employee deferred comp had some change, it'd be reflected in there. But $340 would be a plan steady state. Sherri Scribner - Deutsche Bank Securities: And then just finally in terms of the restructuring, you've said $300 million in savings. How much savings should we expect to see in the COGS number taken out of your fixed costs? You've been pretty clear about what's happening in OPEX, but what should we expect in COGS? Patrick O'Malley: We haven't been explicit because there's many moving parts to that. Its billed material reductions, external sourcing, whether it's internal or external, so there's a lot of moving parts. We haven't been very explicit. We manage the margin through what we'd call our portfolio mix. That's the biggest lever as opposed to cost reductions out of lineups like that. There are dollars there, but our biggest lever in our gross margin is our product, competitiveness and the pricing elements. So we haven't been as prescriptive there. Sherri Scribner - Deutsche Bank Securities: Okay, because that's a little harder to predict? Patrick O'Malley: Yes, and it's just not the biggest lever we have in that bucket.

Your next question comes from Mike Lanier - AIG. Mike Lanier - AIG: I had a question about cash and I apologize - I got pulled away - if you've already answered this, and that is is it right that you said in the past you need about $500 million just to run the business. Is that a good number to use? Stephen J. Luczo: $500 million is the covenant requirement, so you arguably run at less than that. I'm not sure I'd like to run at less than that given where we are even today. I always like to have a little more potentially. But $500 million is a hard covenant requirement we have, so we cannot run the business under that. Mike Lanier - AIG: And then along those lines, because recently from the school of hard knocks we realize that just because you have $500 or $1 billion in cash doesn't mean you actually have full access to it. Can you talk a little bit about how your $1.3 billion, I guess, whatever you ended the quarter with here, how much is tied up? How much is stuck in Europe or in places where you really don't have the ability to draw upon it if you wanted to. Stephen J. Luczo: Yes. No, Mike, we answered that. That must have been when you were off. But yes, no, we have full access to the cash that we have on the balance sheet. None of it is in places that we can't get it immediately. Mike Lanier - AIG: And then as far as the maturities coming around, is it your plan to rebuild the cash and keep it up above $1 billion or are you just going to - you'd be comfortable if it comes down to $700 or whatever it might be. God knows, it takes a crystal ball to know how operations will go, but you do have, what $450 over the next year coming around. Is it your intention to do a capital raising to get it back up if there's no cash build from operations? Stephen J. Luczo: Right. We're looking at the alternatives right now in terms of what's the best options for the company to manage either the retirement of that debt or the replacement of that debt. And so that's basically the task at hand right now and hope to have more information on that in the nottoodistant future. But, you know, we're looking at all the options right now in terms of how to best position the company, again, for our planning scenario of sustained macro trend that we're in today and sustained pricing trend, even though that may not be viable for the entire industry, at least planning for those. And then if things get better, great, but that's what we're [inaudible] right now. Mike Lanier - AIG: And lastly the reduction in CapEx, I guess the way we should look at it is it's probably not going to be a competitive disadvantage because the competitors will probably be doing the same thing? Stephen J. Luczo: Yes. At least on a preliminary basis, one of our competitors has already announced a significant reduction in capital. I think for us we're not reducing any capital that relates to any technology transitions that we have ongoing, and in fact one of the reasons the capital was as high as it was this year is because we were completing a significant technology transition. So we're maintaining capital levels certainly to be competitive in terms of technology and obviously [break in audio] capability in terms of infrastructure. And we believe that given today's demand environment, which we've scoped at 110 million units, plus or minus, for the next couple of quarters and then probably, you know, slow growth if any for the next two quarters after that, we certainly can maintain our ability to respond to the marketplace with those levels of capital.

Your next question comes from Amit Daryanani - RBC Capital Markets. Amit Daryanani - RBC Capital Markets: I think in the past you provided sort of industry TAMs across your product categories. Is that something you won't be providing going forward or could you give us that information this time around?

We have provided it in the past, but we haven't provided it this time because the overall market has taken such a significant contraction. These are our assessments. So we'd be probably better advised this quarter to let the whole thing shake out. We're planning our business accordingly with our customers, but there's still some variation of that 110, where that may settle. So as that gets clearer, I think we'd be better - provide you guidance at that time. But right now there's a lot of variability in the TAM from moving from market to market, so we'd probably stay away from that this quarter. Amit Daryanani - RBC Capital Markets: And then I guess if I just look at the restructuring initiatives and you've talked about OPEX going from $395 million next quarter to about $340 million in June, does that reflect 100% the savings from all the researching efforts or will there be some incremental savings beyond that as well?

They would be very de minimis. Most of the actions that we've talked about in that $300 million of actions are all primarily reflected. There will be some folks that'll still be around in the June quarter, but it would be very small, so you would not probably get much incremental upside to the actions we've talked about. Amit Daryanani - RBC Capital Markets: Since I've been thinking about [$300] million savings, two-thirds on the OPEX line, about a third on the COGS line is a reasonable way to model this thing? Stephen J. Luczo: Well, I think if you did the math that comes close. That comes close. But you could probably look at it from a Q4 run rate and model down to where you see and you could probably figure out where that is. Now realize the $300 million we talk about are these restructuring activities. There's other cost reduction activities the company's undergone, so when you go through and you look at a Q4 run rate to an - '08 for a Q4 '09, you may see higher numbers, but the $300 million there is the restructuring activities we've done, so they're not the only cost reductions that this company has undergone over the last six months. Amit Daryanani - RBC Capital Markets: And just, I guess, finally, [inaudible] this $1.6 to $2 billion revenue band for the next several quarters, and I think the last [inaudible] you were in that revenue band around fiscal '09, the OPEX was around $230, $240 million kind of run rate. Is it fair to say the researching effort we may take beyond this would be focused to drive that OPEX down from $340 to the mid-$200 range? Patrick O'Malley: We'll look at that. As Steve said, this is a situation where we have to line up what we thing our long term is. One of the things we are committed to is to protect our technology and the key products that we think are the financial engines of the company over the next three years, so that's where we'll be protected. We also have some investment in our solid states, you know, technology that we look at that's probably above and beyond what you've seen in the past. So we'll model to deliver the technology and the products across the whole storage market over that, so we'll model accordingly and we'll come back to you, but given the high flux, the high contraction over the last six months, we'll owe you a model on that, but we're committed to get back to profitability in this company. Stephen J. Luczo: And maybe one more question.

Your first question comes from [Unidentified Analyst] - Bank of Montreal. Unidentified Analyst - Bank of Montreal: I had a question on the competitive landscape with the potential combination of Toshiba and Fujitsu. Can you talk about what the impact would be for the industry and for Seagate, particularly your business segments? Stephen J. Luczo: Yes, I think, you know, it'd be hard for us to speculate. I'm not even sure that anything official has been released with respect to it other than speculation. So I think it'd just probably be a little bit misleading to project anything other than putting two companies together is always challenging in the short term and whether or not it's beneficial in the long term depends on how good a job you did. So I think we just have to wait until we hear more from what those two companies want to talk about. Stephen J. Luczo: Okay, everybody, thanks very much for participating today, and I look forward to speaking with you again next quarter. Thank you.

Thank you. That concludes this evening's conference call. You may now disconnect.