Robert Whitmore - Chief Technical Officer and Executive Vice President of Research & Development William Mosley - Executive Vice President of Operations Steve Luczo - Chairman, Chief Executive Officer and President Patrick O’Malley - Chief Financial Officer and Executive Vice President of Finance

Richard Kugele - Needham & Company, LLC Benjamin Reitzes - Barclays Capital Amit Daryanani - RBC Capital Markets, LLC Aaron Rakers - Stifel, Nicolaus & Co., Inc. Sherri Scribner - Deutsche Bank AG Scott Craig Bill Shope - Goldman Sachs Group Inc. Katy Huberty - Morgan Stanley

Good afternoon, ladies and gentlemen, and welcome to conference call to discuss today's announcement by Seagate and Samsung. Later in the call, Seagate will also be discussing its fiscal third quarter 2011 finance results. My name is Shanelle, and I'll be coordinator for today. [Operator Instructions] This conference call contains forward-looking statements, including, but not limited to statements related to the company's future operating and financial performance in the June 2011 quarter and thereafter, the company's ability to generate free cash flow on a sustained basis, the company's stated policy and includes statements regarding customer demand for disk drives and general market conditions. These statements also include statements regarding the transactions described in our earlier press release announcing our strategic alignment, the expected benefits from the proposed transaction, the financial impact of the proposed transaction of the company's financials, the company's ability to consummate the proposed transaction, the satisfaction of closing conditions precedent to the consummation of the proposed transaction, the company's expectation with respect to integration and the timing for closing the proposed transaction. 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, 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 the result to differ materially from those projected in the forward-looking statements is contained in the company's annual report on Form 10-K, Form 10-K/A and quarterly report on Form 10-Q, as filed with the U.S. Securities and Exchange Commission on August 20, 2010; October 6, 2010; November 3, 2010; and February 3, 2011, respectively. These forward-looking statements should not be relied upon as representing the company’s views as of subsequent date, and Seagate undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made. This conference call should be considered in conjunction with the press release we issued earlier today. Our press release and this call contain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure and an explanation of why these non-GAAP financial measures are useful are discussed in our press release. A reconciliation of our GAAP to non-GAAP item is posted on our website at www.seagate.com. I would now like to turn the conference over to our host, Mr. Steve Luczo, CEO. Please go ahead. Mr. Luczo, you may proceed.

I'm sorry about that. First of all, I just want everyone to know that I'm calling in from Singapore and to apologize that the transmission isn't as clear as it normally is. Good morning, and thanks for joining the call today. On the call with me from Seagate are Pat O’Malley, Seagate's Chief Financial Officer; Bob Whitmore, our Chief Technology Officer and Head of Research & Development; Dave Mosley, Executive Vice President of Operations; Rocky Pimentel, Executive Vice President of Worldwide Sales and Marketing; and Ken Massaroni, our General Counsel. I'll focus my remarks on our strategic thinking and the benefits of the Samsung transaction, and Pat will address the transaction details and the financial implications. As you've seen from our press release, in addition to discussing the strategic relationship we have entered into with Samsung, we will also use the later portion of the call to review our fiscal third quarter of 2011 financial results and our outlook for the fiscal fourth quarter. We will not be hosting our previously scheduled call this afternoon. To begin, I would like to express my sincere appreciation to all of the management, employees and advisers who have worked so diligently over these last several months to structure these transactions and agreements. Through a series of transactions and agreements announced today, Seagate and Samsung are significantly expanding and strengthening our strategic relationship by further aligning our respective ownership of, investments in and sharing of key technologies. By aligning in this way, we expect to achieve greater sale and deliver a broader range of innovative storage products and solutions to our customers, while facilitating our long-term relationship with Samsung. The elements of the relationship, each of which I will speak to in more detail, include: Samsung combining its HDD operations into Seagate; extending and enhancing the patent cross license agreement between the companies; a NAND flash memory supply agreement, under which Samsung will provide Seagate with its market-leading semiconductor products for use in our enterprise SSD, solid-state hybrid drives and other products; a disk drive supply agreement, under which Seagate will supply drives to Samsung for its PCs, notebooks and consumer electronics; extended cooperation between the companies to co-develop enterprise storage solutions; Samsung receiving significant equity ownership in Seagate; and a shareholder agreement, under which an executive of Samsung will be nominated to join Seagate's Board of Directors. The combined value of all of these transactions and agreements is approximately $1.375 billion, which will be paid by Seagate to Samsung in the form of 50% stock and 50% cash. The primary objective of our new relationship, anchored by these agreements is to enable both companies to better align current and future product development efforts and roadmaps, accelerate time-to-market for new products and position the companies to better address rapidly evolving opportunities in a variety of markets, including mobile computing, cloud computing and solid state storage. Specifically, we will be able to optimize resources of both companies to advance technology on behalf of our customers. This will increase our responsiveness to customer needs, accelerate the adoption of next-generation technology, speed innovation and allow customers to benefit from an important technology transitions. In addition, through the mutual supply agreements that are part of our strategic relationship with Samsung, Seagate secures an important source of a leading edge NAND flash supply, as well as early visibility into the development of next-generation NAND technologies. This will be very valuable to Seagate, as we continue to execute on our strategy of developing SSD and solid state hybrid product offerings. These agreements also position Seagate to be a more significant supplier of disk drives to Samsung for their broad offering of products. Once this transaction is complete, Samsung will have a significant ownership position in Seagate and the right to nominate an executive of Samsung to join Seagate's Board of Directors. This further underscores the high level of alignment between our companies and position Samsung to benefit, along with Seagate's other shareholders, from this enhanced relationship, as we execute together in the future. The key aspects of the agreements that I want to highlight is that we are acquiring only those elements of Samsung HDD operation that Seagate needs in order to achieve greater scale and efficiency. Together with Samsung, we have been thoughtful in identifying the assets, infrastructure and people that we need to drive scale and innovation, which we expect to be able to leverage to enhance our future products and accelerate innovation. Elements of the HDD operations that we do not need will be retained and redeployed within Samsung. Because we have structured the transaction this way, we do not anticipate significant restructuring cost, and we expect to achieve significant reduction of overall operating expenses for the combined businesses while maintaining the integration cost and distractions -- by minimizing the integration cost and distractions that have been associated with other transactions historically. To help us accomplish that smooth transition and minimize distractions and disruptions, as well as restructuring charges, a number of support and transition functions will be temporarily provided by Samsung to Seagate. We will be focused on achieving a timely closing of all elements of this enhanced strategic relationship. We anticipate that the revised IT, cross-licensing agreements and the NAND supply agreement will be become effective this quarter. The other elements, including the acquisition of Samsung's HDD operations, the equity investment by Samsung and Seagate, and the HDD supply agreement will be driven by the regulatory approval timetable. For those elements, we are targeting closing by the end of calendar 2011. With that, I will turn the call over to Pat. Patrick O’Malley: Thank you, Steve. First, to summarize the key terms of the transaction, we believe that the consideration of structure in a way that is optimal for both parties. Under the terms of the agreement, Samsung will receive consideration consisting of 50% Seagate ordinary shares and 50% cash. Upon closing, Samsung will receive Seagate ordinary shares valued at $687.5 million. Specifically, they will receive 45.2 million shares, or approximately 9.6% ownership of Seagate, based on Seagate's 30-day volume weighted average stock price prior to signing. Samsung will also receive $687.5 million in cash. The amount of cash paid is consistent with Seagate's balanced capital deployment strategy which also encompasses the recently declared dividend, ongoing share repurchase and recent debt price refinancing. I like to emphasize that the $1.357 billion represents the value of all the elements of this transaction, including the HDD operations, cross licenses and supply agreements. However, even if you just consider the HDD operations alone, which are capable of producing 18 million units per quarter, this is a highly effective use of capital in line with our overall capital deployment strategy. We expect our capital budgets to remain at a level we have discussed previously of 68% of revenues going forward. During calendar 2010, Samsung's HDD operations shipped approximately 66 million units and had $3.1 billion of revenues. We anticipate that summary balancing by customers may happen in connection with this transaction, but we will be focused on maximizing revenue retention. We expect that any revenue attrition will be mitigated because Samsung's customer base, which includes a significant volume of distribution channel customers, has a relatively little overlap with Seagate's customer base. In addition, the supply arrangement with Samsung will enable continuity of demand. So we are confident that we can manage and limit revenue attrition effectively and achieve an attractive return profile. As a result of the transaction structure, Seagate expects these transactions and agreements to be meaningfully accretive to non-GAAP earnings per share and cash flow within the first full year following the closing. With that, let's now shift to the March quarter financial results and the outlook for the June quarter, and then we'll open up the call to Q&A. As we have done now for the past several quarters, we have posted detailed supplemental information about the quarter on our Investor Relations website. Seagate reported revenue of $2.7 billion and non-GAAP gross margin of 19.2% for the March quarter, both at the high-end of our January forecast. The company also reported non-GAAP diluted earnings per share of $0.25 per share. Earlier this month, Seagate announced that the board had approved a quarterly cash dividend of $0.18 per share. The establishment of the quarterly dividend is an important milestone for the company as it reflects the strength of our balance sheet and a strong cash generation ability of our business. Additionally, it demonstrates the confidence that the board and the management team have in the company's ability to generate free cash flow on a sustained basis. No change is anticipated in this dividend in policy in light of today's announcement. During the March quarter, we repurchased 29.5 million shares for approximately $405 million. This leaves approximately $1.6 billion remaining under existing share repurchase authorization, and we anticipate no change in authorization program in light of today's announcement. We expect to maintain a sufficient cash balance that will enable the company to respond quickly to changes in market dynamics, take advantage of unexpected opportunities, and provide flexibility for future investments and growth. The goal of our capital structure strategy is unchanged: to maximize shareholder returns, while maintaining the flexibility to invest in a broad range of storage technologies to serve our customers. Turning to the June quarter outlook, the impact of the Japan earthquake and tsunami in March is still affecting the PC supply chain, and in particular, it's constraining supply of hard disk drives due to specific component shortages, power issues and transportation issues. Seagate has not been materially negatively impacted by these issues to date. While we do not anticipate component shortages directly attributed to the tragedy in Japan to impact Seagate, we are closely monitoring the situation. As of now, we expect the situation to be volatile for several months. As such, we are planning for June quarter industry can to be flat to slightly down as compared to the March quarter. The June quarter outlook does not include the impact of restructuring activities, future mergers, acquisitions, financing, dispositions or other business combinations the company may undertake. The company's policies refrain from commenting on any such activities. As a result, the outlook for the June quarter is approximately $2.7 billion, OpEx is flat to the March quarter, a tax rate between 3% and 10%, diluted earnings per share is expected to be in the range of $0.19 to $0.23 per share. We are now ready to open the call for questions.

[Operator Instructions] And your first question comes from the line of Aaron Rakers of Stifel, Nicolaus. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: First question for me is, I understand that you guys are talking about the dividend and share repurchase. How do we look, post this deal? How does the balance sheet, how does the capital structure look? How much data are you willing to put on the balance sheet, just kind of any framework of how we should think about that?

I'll give a brief answer, and then, Pat, you can fill in. As indicated, the deal is really -- the whole transaction is actually being financed with cash from our balance sheet that we currently have, as well as equity. And I think risk ratio -- cash generation capabilities of the company, we certainly feel that the transaction will be financed in a manner that will not change any of the elements with respect to the dividend or the long-term buyback program that we've had in place. That being said, we're not commenting on any future financings we might take , it is not necessary at the course of this transaction but just as a course of our normal balance sheet management. Pat, you want to... Patrick O’Malley: Yes. The only thing I'd add is today we're $2.9 billion. We also have structured debt due in October. With this transaction, we're comfortable with both coming off the balance sheet, but we're also very comfortable with the level of debt we have today. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: And then as a follow on, I think you referenced $18 million as kind of the capacity that Samsung offers. I think there's been stories out there, some indications out there, that Samsung does leverage TDK as a manufacturer of a portion of their hard drive business. Can you say how much TDK -- is TDK included in that 18 million number or is that just the capacity that has been the manufacturing capacity within Samsung?

Right. I'll answer the question, no, the 18 million units in the $3.2 billion is representative of the total output of Samsung that they have seen all through the relationship with TDK/SAE, as well as the assets that they own and operate directly. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: And how much do they -- how much of that is TDK?

We're not breaking that up, but we're basically having access to both of those asset bases. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: And then final question for me is on your guidance, are you assuming -- in your preliminary results, you talked about distribution inventory levels running below the targeted range. Is your guidance assuming any replenishment at all of distribution inventory levels? And if you can tell us what those levels currently stand at?

I'll answer part of that, and I'll ask Dave Mosley, probably, to answer the other part of it. I just think, in terms of what might happen during the quarter, it's very fluid right now. The supply situation is constrained, and therefore, ability to drive inventory levels to what might be considered more normal levels would probably be difficult. So, Dave, you want to add anything to that?

We're not anticipating any significant replenishment. We finished below our targeted four weeks. But from our perspective, things were -- in the channel were lower than what we expected. But a lot of that was the strength of the last five or six weeks of the quarter, so I think it's really hard to forward forecast given all the disruptions we talked about.

Your next question comes from the line of Ben Reitzes from Barclays. Benjamin Reitzes - Barclays Capital: Steve, can you talk a little bit more about Samsung's earnings potential? I mean, you're saying it's accretive. It could be meaningfully accretive, any numbers around that. And in particular, what are Samsung's gross margins? And then I have a follow-up.

Yes, I'm going to let Pat answer that in more detail. But we are not prepared to talk about specifics on the earnings model yet. And we have a lot of work to do in the interim period. And of course, we're also subject to regulatory conditions in terms of the type of work that we can do with Samsung until the transaction is approved by the various regulators throughout the world. But based on what we know and what the opportunities are around leveraging the infrastructure and the fact that it's a pretty capital light operation that we do believe will be meaningfully accretive. Pat, you want anything else to add? Patrick O’Malley: You're absolutely right, Steve. We're leveraging through the structure they had, we certainly scale with our own components, further scale with their own components. And as Steve said, one of the very asset light business would fit in very well with our strategy that we can leverage more and their operating expenditures we certainly could lever that. So we see many vectors of leverage in this. A very well known structure that within the first full year, it strikes us to be meaningfully accretive. Benjamin Reitzes - Barclays Capital: In terms of gross margins, going forward, I think it's pretty well known that they're not -- given their lack of enterprise exposure, etc., it'll be meaningfully below where you're at now. And so with lower gross margins, we still get you at least in the beginning, we get you meaningfully accretive.

But, Ben, you're taking that under the construct what their scale and leverage was. I mean, they were very -- as a design team, very, very efficient. They just didn't have scale and leverage. Now you put that in our business, you can't take their gross margin as they're operating today and lay them into our financials because we're going to get scale out of theirs, which they lack. They don't lack design capabilities or manufacturing capabilities, they just lack scale. Benjamin Reitzes - Barclays Capital: Got it. That's helpful. Thanks. Then just a little bit more on pricing, can you talk about, on the industry with regard to the quarter in your guidance, Steve and Pat, what happened with pricing towards the end of the quarter? It sounds like there was surge in business. It sounds like distributors, especially looking for product in cases of shortage. And can you talk about what pricing does specifically and how you see pricing in the June quarter? That would be great.

Yes, I think the quarter, it wasn't a surge in demand due to a concern about supplier alert. There is constrained supply. And a lot of course the pricing negotiations with their OEMs have already been concluded prior to the disruptioning of the supply chain. And of course the channel is more typically a spot market and is basically the evidence of the supply/demand tightness right now, that the pricing has firmed relative to where it was. Benjamin Reitzes - Barclays Capital: And in June? What are your expectations of pricing?

Again, I think, as we indicated in the call, we expect that the supply situation is going to remain constrained through the June quarter.

And your next question comes from the line of Katy Huberty of Morgan Stanley. Katy Huberty - Morgan Stanley: First, as it relates to the joint development and partnership with Samsung on asset fees, does this actually accelerate time-to-market? Are they much more strongly competitive as is the solution in enterprise? And what's your latest thinking as to when you'll have a very competitive product in the market in that space?

Well, I contend that the other competitor [indiscernible] (26:07)Dave talk to that more exclusively, but I think as it relates to what we consider our third generation product which is the one that we are developing a piece of silicon with Samsung, and utilizing their NAND flash. It doesn't accelerate the timing of that. That product, that program is on schedule. And I'll let Bob speak to that. I think we've given updates in the last couple of calls. But I do think it does address an issue that customers have raised repeatedly, as well. They have a lot of confidence around the capabilities of Samsung and Seagate's ability to design this last management engine, leveraging our capabilities at the channel and interface and controller level and ,of course, Samsung in terms of [indiscernible] (26:54) silicon. There's always been a little bit of a concern about without a formal supply agreement, what was the whole package going to look like. So they're specific to that agreement, are subject to MDA, but I'm pleased with where we ended up. And I think it’s a significant conclusion to that entire strategy. Dave, you want to add anything?

No, I think you said it well.

Bob, you want to talk about the timing?

No, I think you said it. I think the engagement with Samsung is longer-term. And currently we are in qualification with our SLC product. SAS, SLC products, we just -- you'll see in the supplement that we just announced our NLC-based SSD, which will be coming into production shortly. So those two are unchanged, and as Steve said, the real strategic engagement will happen on the third generation. Katy Huberty - Morgan Stanley: On the quarter, the $26 million increase, and with in raw material inventory, we've got a strategic decision, post the Japan earthquake, and is that what is driving your confidence in being able to set the components you need for June or is that confidence driven by conversations you've had throughout the supply chain or a combination of both?

Yes, obviously a follow-up on -- I'll take the last part of it. So far, I'm looking for some wood here to knock on, the issues related to the Japanese earthquake and tsunami haven't directly impacted us in terms of component availability. That being said, obviously, that's major transportation hub is damaged, major power grid is damaged. There's a lot of human loss. So the implications, I think, are still to develop. So we have tended to have very weak and broad supply chain. And it may be one of the reasons why, historically, some of our cost of goods maybe was higher than some of our competition because we tend to keep multiple sources, and maybe sometimes, not necessarily a cost with that, but I think in this particular case, the relationships most definitely supply chain are certainly benefiting us relative to some other people that are in the PC supply-chain. Dave, you wanted to talk specifically to the inventory issues?

Yes, Katy, I think you said it. You talked about the earthquake and tsunami as the trigger. I think that's probably not the right way to characterize it. We believe the demand in March was pure demand, real demand, and it's actually extended somewhat into April. And so the staging and the width of the raw materials is all about staging for that early month 1 demand. I think there'll still be the volatility all the way out through June. And that's the thing that we made reference to before relative to the supply-chain disruption. Katy Huberty - Morgan Stanley: And just lastly, Pat, I think you've said that the earliest growth margins could uptick would be the September quarter with the new desktop products planned to be launched. With the industry consolidation and the tightness we've seen over the last several weeks, is there a chance that that changes, and there's some potential upside for June? Are you still thinking about that back half as when the earliest the gross margin could...

Yes. With respect -- there hasn't been any industry consolidation. These transactions are all still pending and everybody is still competing against each other like they normally would. And I don't know what the indication is on the WD/Hitachi transaction. I think it was anywhere from 4 to 12 months. And we've indicated that we believe that this would be sometime before the end of this year. So that aspect doesn't really change anything, and I don't think we'll change anything post transaction. I think, as I indicated, there does appear to be security supply/demand imbalance that's related to component shortages that are impacting the various people in the supply-chain and in particular in this PC supply-chain. And that could have the implication of firmer pricing and depending on how bad those dislocations get, that will impact margins. Right now, as you can tell, we're not actually predicting anything like that happening. Patrick O’Malley: I hear you, Steve. I mean, we've been focused about the new products, and that's what's going to drive it for us. These other ancillary items are, as Steve said, maybe opportunistically. But this year is all about driving the product transitions and how to sustain ability to hold the gross margins higher. So that's number one. And these other opportunities, as Dave and Steve echoed, we are positioned to take advantage of them. But it is going to be volatile, so we want to be flexible on that. So I think we're still just focused on driving a cost structure for the new products that will maintain it for a period of time. Katy Huberty - Morgan Stanley: Okay, thank you. That's it for me.

Your next question comes the line of Richard Kugele of Needham. Richard Kugele - Needham & Company, LLC: Thank you. Just a couple of questions, I guess. First, in terms of Samsung, can you give us a sense of what their mix was versus -- OEM versus channel? And then secondly, in terms of the quarter, is it fair to say then, just to summarize some of your comments, that your lack of impact on the component availability is leading to the opportunity for you to pick up maybe some share over the near term? And does that affect -- has some of that share been as well leakage from Hitachi WD a little early, if you've had any color from the OEMs on that side?

Rich, I think I'll answer the second question first. I think that -- I don't know if it has anything to do with leakage from an announced transactions. I think it's more related to the relative impact that the component shortages have had on all of our competitors. And we have seen a lot of upsides from a lot of customers, and we can only respond to so many. And of course we need to manage our overall production, as well, given the fact that our factories are getting near capacity as well. So I don't know that I can say that it's the leakage because of the talks of Hitachi/WD transaction as much the interruptions to the supply-chain. With respect to Samsung OEM channel, I'm not going to talk specifically to it other than to indicate, obviously, they have a large OEM customer in the form of their own company on the PC side and other computer-related products and consumer products. And then they also have a channel business that's very interesting. There's not a lot of overlap, as it turns out between new the Seagate customer base and the Samsung customer base, particularly in the channel. They have some very unique access points to markets that we think we can learn a lot from. Richard Kugele - Needham & Company, LLC: Okay. Just one last one on Samsung. Is the $688 million worth of stock, does that vary as the stock price if it were to rise? Would you issue less shares or is that a fixed share volume?

No, it's a fixed share volume that we based on the negotiated transaction volume of 1.375, but it has a 30-day average on the calculation on these shares. So that share count is now fixed. Richard Kugele - Needham & Company, LLC: Okay. Thank you very much, and congratulations.

Your next question comes the line of Amit Daryanani of RBC Capital. Amit Daryanani - RBC Capital Markets, LLC: If you look at over the longer term, do you think the combined entity will have a different longer-term gross margin target than what Seagate has independently had?

Pat, you want to answer that question? Patrick O’Malley: At this stage, we would not certainly move away from it. Obviously, they don't have the enterprise business. But what we think we can pick up scale and drive cost savings, we would, at this point, not move away from that. We'll continue to evolve that story, but our intention is to drive and keep our target margin at 22% to 26%. Amit Daryanani - RBC Capital Markets, LLC: And then just for March quarter, can you just talk about what drove the strength in the quarter? Was it the OEM sort of buildup inventory towards the end of the year, end of the quarter or was it more broad-based in demand that you saw?

I'll answer that question in a second, but I think just one thing also on the benefits of the Samsung transaction. I mean, Pat mentioned scale a couple of times. I think it's important for everyone to realize though that Samsung is a very capable designer and producer of hard disk drives. And there's a lot of technology ownership that Samsung has both on the design side and on the production side. But we believe we'll be able to bring elements of that over to our entire operation being able to leverage across our portfolio. I think it's important to note it's not just about a mass number of scale, but that’s a very confident group that’s been in business for a long time. Making certainly a material amount of disk drives and there will be benefits we can leverage across our whole company, and hopefully reduce cost and pass those savings on to our customers. Dave, you want to talk on the kind of the demand elements in the March quarter?

Yes, just relative to the linearity January, February fairly slow. And that followed a December that was fairly slow as well. The March was strong. And again, I believe, and I talked about this earlier relative to the distribution channel, it was fairly broad-based demand. I think that the OEM band distribution was fairly well represented in March. And I think some of that strengths continued into April as there were a number of supply disruptions, I think, even earlier in January, the various chains that have caused people to pull back a little bit in January and February. Amit Daryanani - RBC Capital Markets, LLC: And just finally, if my math's right, looks like the June quarter gross margin are trading down, could you just confirm that and so what's driving it?

Pat, do you want to address that? Patrick O’Malley: Yes, I'll take that. Yes, they're going down, as much as we feel very comfortable where we're at in April, Steve and Dave talked about the volatility of this. I mean what we're – we’re modeling is for an historical June quarter. We certainly think there's potential upside to that, but given the nature of the supply-chain, where it's been impacted, we're just modeling for the lack of any other reason, just for historical, given the dynamics and the whole business model for that. So it has to be modeled down because of the approach we're taken to the forecast.

And your next question comes from the line of Scott Craig of Bank of America Merrill Lynch.

Steve, maybe from a long-term perspective, there's a lot of consolidation going on in the industry obviously. So how do you think the margin structure gets affected for the industry longer term? Is up a couple hundred basis points a reasonable assumption given everything that's going on? And then secondly, do you guys foresee any regulatory issues going on with any of the transactions that are pending, given the top two players that are going to have a fairly significant market share here?

I think with respect to the second one, no, we don't anticipate regulatory problems. We'll be working with the regulatory agencies in all of relevant jurisdictions to get the transaction approved as constructed, and we're confident that we can do that. I think in terms of margins going forward, I think the important thing about the industry consolidation is, honestly, is more about creating business models that can fund new technology going forward that our customers need. I think as a result of a lot of issues, the demand for storage is accelerating. The petabyte growth is very strong and really has been over the last six to eight quarters, even in an economy that, for the most part, has been pretty lackluster. The petabyte growth, the shift by the drive industry has grown at a very high rates, higher than historical rates. And this is against a backdrop of an areal density curve that is actually slowing, where that person in the S curve, where basically the technology gains we can get out of the current levels of technology are getting more and more difficult. So that means in order to address that pipeline growth, either a lot more investment has to go into the fundamental technology to accelerate our areal density. And if that can't be achieved with the current level, the current generation of technology, then the only way that you can really provide that storage required is with more heads and disks, which of course is a big capital budget to it. So I think the consolidation is really reflective of the needs of the industry to make new investments in capital and technology to continue to provide these devices that are in such huge demand. And, oh by the way, the demand is probably accelerating as a result of all these wonderful viewing devices that basically are putting very rich content in front of people and therefore, that content, which is very rich in terms of its density, has to be stored in that storage. It has to be on rotating discharge because of the cost and the density of that technology. So even though that end viewing device may or may not have a disk drive on it, everything that's up and down the food chain to pump it through that little beautiful window needs to be stored in that magnetic rotating disk somewhere. All that being said, the ability, commercial deployment, enterprise computing in Asia, this is a big demand for what we do and how we continue to deliver it in a way that allows our customers, whether they're not consumers or enterprise or system integrators, they do that as competitively as they had for the last 30 years. And I think it's more about stability of a business model so you can make those investments as opposed to necessarily a gross margin structure changing or increasing.

Your next question comes from the line of Bill Shope of Goldman Sachs.

And I think we're just going to take one more question now because we're, I think we're getting close to market opening, If I'm not mistaken. Bill Shope - Goldman Sachs Group Inc.: Assuming the deal closes, can you walk through how we should think about your longer-term procurement strategy? In particular, how we should think about your sourcing of internal versus external components?

I don't think there will be any big changes. And again, I think Seagate has a strong relationship with many of the same suppliers that Samsung does. And it's our expectation that we can both actually strengthen those relationships as result of this transaction. So I don't think that there's going to be any fundamental change in our long-term strategy. Dave, you want to add anything to that? Shanelle, sorry, I meant we can take one more. Looks like we have just a few minutes here.

Your next question comes from the line of Sherri Scribner of Deutsche Bank. Sherri Scribner - Deutsche Bank AG: I wanted to just ask about your CapEx plans, going forward. I think on the call you mentioned that you didn't have any changes to your CapEx plans with the transaction. But I'm curious, with the Samsung acquisition, does that mean you're getting additional capacity? You don't feel you need to add anything this year? Do you think you'll need to add capacity for the second half of the year? Just wanted to get a sense of what you're thinking about.

Once the transaction closes, we will have capacity that is coming over from Samsung. And we would certainly intend on utilizing that. And I think, the message should have been not that our capital budget is going to change, but as a percentage of revenue, we'll still expect that to be in the 6% to 8% range. The Samsung operations have been very capital efficient, so there's an advantage to us in terms of not having take on a lot of capital that's expensive or depreciated or not depreciated. It's a very capital-light model that they have to produce anything that they produce. We'll be able to leverage that, obviously, over time, absorb it into an integrated manufacturing organization. And overall, I think we can still hold capital budgets of 6% to 8%. Sherri Scribner - Deutsche Bank AG: And so is the idea that if there's some overflow potentially you use TDK to manufacture those drives, is that kind of the thinking?

We're not going to talk to specific arrangements, but again we don't see any sudden changes to the relationships that Samsung have.

Okay, I'd really like to thank everyone. And I feel sorry that we had to shift the call at the last minute. But I'm sure you can understand. It's been a complex and moving transaction that we are pleased to conclude. And therefore announced part of the opening today, I want to thank all of the Seagate customers and suppliers and employees, in particular, for their effort over the last quarter. And we look forward to speaking to you again next quarter. Thanks very much.

Ladies and gentlemen, that concludes the presentation. Thank you for your participation. You may disconnect. Have a great day.