Kate Scolnick - Vice President, Investor Relations Steve Luczo - Chairman and Chief Executive Officer Pat O’Malley - Executive Vice President and Chief Financial Officer Rocky Pimentel - President, Global Markets and Customers Dave Mosley - President, Operations and Technology Ken Massaroni - Executive Vice President and General Counsel

Aaron Rakers - Stifel Amit Daryanani - RBC Capital Markets Andrew Nowinski - Piper Jaffray Joe Wittine - Longbow Research Jay Noland - Robert Baird Steven Fox - Cross Research Sherri Scribner - Deutsche Bank Ananda Baruah - Brean Capital Monika Garg - Pacific Crest Securities Rich Kugele - Needham Scott Schmidt - Morgan Stanley Nehal Chokshi - Technology Insights Research

Good afternoon, and welcome to the Seagate Technology Fiscal Second Quarter 2014 Financial Results Conference Call. My name is Jason and I will be your coordinator for today. At this time, all participants are in listen-only mode. Following the prepared remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. At this time, I would like to turn the call over to Kate Scolnick, Vice President, Investor Relations. Please proceed Kate.

Thank you. Good afternoon everyone and welcome to today’s call. Joining me today from the Seagate executive team is our Chairman and CEO, Steve Luczo; EVP and CFO, Pat O’Malley; President, Global Markets and Customers, Rocky Pimentel; President, Operations and Technology, Dave Mosley; and EVP and General Counsel, Ken Massaroni. We have posted our press release and detailed supplemental information about our fiscal second quarter 2014 on our Investor Relations site at seagate.com. During today’s call, we will review the highlights from the quarter and provide the company’s outlook for the fiscal third quarter 2014. We will refer to non-GAAP measures which are reconciled to GAAP figures in our supplement. After that, we will open up for questions. Please note that our announced acquisition of Xyratex is in the regulatory approval process and we will not be taking questions about the transaction on this call. As a reminder this conference call contains forward-looking statements including but not limited to statements relating to the Company's historical and currently anticipated future operating and financial performance in the December quarter and thereafter and includes statements regarding customer demand and general market conditions. These forward-looking statements are based on information available to Seagate as of the date of this conference call and are based on management's current views and assumptions. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated by these forward-looking statements. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this report is contained in the company’s annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on August 7, 2013 and the quarterly report on Form 10-Q filed with the U.S. Securities and Exchange Commission on October 29, 2013. The risk factor section of which are incorporated into this report by reference. These forward-looking statements should not be relied upon as representing the the Company’s view of any subsequent date, and Seagate takes undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they are made. I would now like to turn the call over to Steve Luczo. Please go ahead, Steve.

Thank you Kate. Good afternoon everyone and thank you for joining us today. Seagate demonstrated solid execution this quarter achieving revenues of $3.5 billion, net income of $428 million, and diluted earnings per share of $1.24. On a non-GAAP basis, we recorded gross margin of 28.5%, net income of $455 million, and diluted earnings per share of $1.32. We had a very strong cash flow quarter generating operating cash flow of $856 million and free cash flow of $713 million. During the December quarter, we shipped a record 52.2 exabytes of storage and averaged a record 922 gigabytes per drive across our portfolio. Our non-GAAP operating margin for the quarter was 14.4% and operating expenses, inventory turns, and day sales outstanding were within our targeted ranges. Our balance sheet remains healthy as we ended the quarter with $2.3 billion in cash and investments. As part of our capital allocation strategy, returning value to shareholders through share redemptions and dividends remains a top priority for Seagate. During the December quarter, we redeemed 33 million shares which put us a few quarters ahead of our fiscal ’14 plan and raised our quarterly dividend by 13% to $0.43 per share. Through these activities, we expect to meet our goal of returning approximately 70% of operating cash flow to shareholders this fiscal year. We have talked about strategic acquisitions as a potential area of capital deployment and at the end of December we announced that we entered into an agreement to acquire Xyratex for $374 million. Xyratex is a leading provider of data storage technology including hard disk drive test equipment in modular solutions for the enterprise data storage industry. The addition of Xyratex will further enhance Seagate’s vertically integrated supply and manufacturing chain for disk drives and ensure uninterrupted access to important capital equipment. The acquisition also expands Seagate’s storage solutions portfolio by adding Xyratex’s industry leading enterprise data storage systems and high performance computing business. We expect to close this transaction sometime in the June quarter and for the acquisition to be slightly accretive in its first full fiscal year of operation or sooner. As the trends in Exabyte growth and technology shifts continue to develop over time, we focus on a few main areas that we believe will allow us to continue to deliver solid results in the near term and position us well for long term success. These areas include expanding and innovating our storage product portfolio to align with emerging trends in mobility, cloud, and open source computing. In the mobile space, we’re leading the industry in hybrid technology and our 5-millimeter drives are now being sold by multiple-OEM manufacturers in tablets. For cloud-based applications, we have launched our Kinetic platform for object based storage with strong interest from developers, customers, and then users, and we are continuing to expand our offering of high capacity drives with our 6-disk, 6-terabyte drive shipping early next quarter. Investing and improving areal density and advanced storage technologies, we are shipping in-volume drives that utilize single magnetic recording or SMR and we will continue to deploy this technology advancement across our portfolio in the coming months. We also continue to invest in advancing our HAMR technology development and our hybrid and flash technology initiatives. We are deepening our customer engagements. One of the most positive emerging trends we are seeing is the interest from customers in requesting a deeper strategic engagement. Our opportunity to add more value for our customers and help them advance in areas such as big data analytics, hyperscale data management, and high-density content management are new opportunities for the disk drive industry. We are making investments in our go-to-market capabilities and product development and technology to engage more strategically with an expanding customer landscape, including OEMs, service providers, enterprise information technology functions, and consumers, and we are managing our capital investments. We are currently running our capital investments at the lower end of our long-term targeted range of 6% to 8% of revenue, and it will be most likely -- and it will most likely be below the range for the full fiscal year. We are managing our production cautiously, and we are pleased with our performance against our metrics for manufacturing efficiency and operational excellence. Turning to our March quarter outlook, we expect to achieve at least $3.4 billion in revenues and to maintain non-GAAP margins approximately flat sequentially. Demand so far has been at a solid pace this quarter and industry inventory remains low. We are planning for operating expenses to be relatively flat sequentially, which would result in OpEx that is slightly higher than our targeted range of 12% to 14% of revenue for the third quarter, but it’s still within the targeted range for the fiscal year. Over the last year and a half, industry Exabyte shipments have grown approximately 30%, while units have remained in a manageable range of between 130 million and 145 million units per quarter. Based on macroeconomic conditions, we expect these market dynamic characteristics to continue as customers remain cautious with their forecast and the project-based nature of cloud build-out represents challenges for them in terms of purchasing, timing – of purchase timing. Given these dynamics, we are running our business consistent with what we have done in the last several quarters by managing production slightly lower than forecast with the ability to flex up if additional demand warrants. On behalf of the entire management team, I would like to thank our employees for the performance this quarter and thank our customers, partners and suppliers for their support and commitment. Seagate is well-positioned in the storage technology markets we serve and we will continue to focus on executing to our financial model and delivering strong operating results for Seagate shareholders. We are now ready to take questions.

(Operator Instructions) And the first question comes from the line of Aaron Rakers with Stifel. Please proceed. Aaron Rakers - Stifel: Yes, thanks for taking the question. So I guess I want to go back to two things really, the comment on the capacity shift, if I look at your capacity shift and also what Western Digital had reported, it looks like we saw about 12% year-over-year growth. So I am kind of curious of what underneath of that you are seeing be it on the enterprise side, I guess in the context of that given the decline sequentially that we saw in this last quarter?

Decline, I am not sure you are referencing any decline? Aaron Rakers - Stifel: The enterprise shipments sequentially declined in the December quarter?

Okay.

This is Rocky Pimentel. I think it addresses actually which I think our competitor referred to, in the fourth quarter, I think the industry saw a bit of a softness in the cloud side of the enterprise drives, the capacity-centric enterprise drives, and that was really just due to the timing of the build-outs and planning of CapEx. It has continued to be a category that offers substantial long-term growth, but I think as others have pointed out, it will be a situation where it will be lumpy until processes improve at the cloud service providers to create a more smooth and linear approach to how they deploy their resources in the data center but I think that was just what you saw in the December quarter, but fundamentally the category is very strong and represents a tremendous growth opportunity as we go forward.

One of the things that we have noticed in terms of conversations with some of the customers, in case, sometimes it's through the OEMs and sometimes it's directly with the customers that are deploying. There has been a lot of effort to reduce the time between purchase and deployment of these assets that are going into the cloud infrastructure, and especially you know the folks that are in the multi-billion dollar range per year, so deployment being reduced from in excess of nine months to more best-in-class deployment rates that are probably in the 3- to 4-month range now are still working their way through the industry, and so I think that does create a situation where there is inventory that’s basically being absorbed as people reduce that deployment time.

The next question comes from the line of Amit Daryanani with RBC Capital Markets. Please proceed. Amit Daryanani - RBC Capital Markets: Couple of questions, one I guess just for the March quarter, it sounds like you are expecting sales to be down about at least 3.5% - 4% or so. What are you expecting from a TAM basis, and then on the pricing as well because it sounds like enterprising can actually pick up for you guys a bit in the March quarter?

Again I think what we -- right now the outlook is for revenues to be at least $3.4 billion so it's in the least. So, I mean I don’t know what’s the percentage you want to apply to that and it kind of depends how good the quarter fills out, but it's off to a good start. In terms of TAM, that’s why we try to make the comments that we did that the industry seems to have been operating in the 130 to 145 range, and we expect it will continue to operate in that range, and then I guess we said in the last few calls within that range, you know, arguing about whether or not it's an extra 1 million or 2 million units is not what drives the business models of the companies. Amit Daryanani - RBC Capital Markets: And inventory, let’s say was up about 9% sequentially for you guys. Can you talk about what drove that in the quarter and how do you expect inventory to track in the March quarter going forward?

Yeah, a couple of things on inventory, so finished goods was relatively flat, although there is some of the – I’m going to call it and hold it across the finish line especially in the cloud space, because their lead times are very long for those product lines. I think as people know, but finished goods was relatively flat. It was within raw materials and some of that was just staging for this early linearity that we have seen pretty healthy up against Chinese New Year, I think so, but that’s the general trend there. I think we can get it back right down and check to where we have been running them the last four quarters, so I’m not too worried about inventory.

Inventory in the system at the customers is very lean.

And your next question comes from the line of Andrew Nowinski with Piper Jaffray. Please proceed. Andrew Nowinski - Piper Jaffray: Just following up again on those enterprise comments I guess your overall enterprise unit growth lagged to Western Digital this quarter, but your capacity [centered] (ph) drives certainly performed nicely despite not having a 6 terabyte drive in the market. So I guess were you surprised by that growth and do you think that will accelerate when you have a more competitive product in the market next quarter?

I think we definitely think there is lots of opportunities, still you know some throwing out in some of the cloud service providers demand, but certainly as we go out over the year strong growth and in terms of next generation capacity-centric drives, you know we’re very positive because we will be, we’re releasing a 6-disk, 6 terabyte drive early in the June quarter which we think will be very interesting to the customer demand. Andrew Nowinski - Piper Jaffray: Okay well maybe then on the performance-optimized side, I guess what’s going on there? Is there any sort of competitive dynamics impacting your growth there?

No I think it's pretty much as it's been in the last number of quarters. Nothing unusual there.

And your next question comes from the line of Joe Wittine with Longbow Research. Joe Wittine - Longbow Research: Steve, I hope you could talk about within the PC category, the mix of hard disk drives within PCs, and really just kind of where they are trending, is the rate of share loss let’s say easing? From my – from where I sit, I guess in the low end, we are starting to see some $300 type PCs with traditional HDDs and Windows, etcetera that seemingly makes sense for the category that has faced some headwinds from Chromebooks. And then in the high end, you guys have put out the press releases on the 5 millimeter getting into 2-in-1s in some tablets, so really just kind of curious on your commentary of the rates of share movement of HDDs within the PC category?

Yes, I mean, I think the client business was stronger than we would have expected in the December quarter and it was stronger throughout the quarter, and client can be desktop and/or notebook and it seems to be continuing into this quarter. So in that sense, I think there is a stabilization and I am glad you pointed out, most of the world is not at $1,000 price point, but I think that the one thing in your comment, to just point out too in terms of even the high end, about 6 million notebook units a year -- a quarter going out with SSDs, but the hybrid penetration on that has been actually growing as well. I think last quarter we did something like 1.7 or 1.5 million hybrid drives, so almost 20% of that market that was part of that time, SSD-only has already been penetrated by HDD, which I think not a lot of people aren’t really focused on. And then as you pointed out, the traction of the 5-millimeter drives in no thinner, wider either direct tablets or even convertibles, we do think it’s going to be a decent product category, especially for people that have high-density content that they want to have on those devices. So I do think that there is plenty of role for disk drives to play in this ecosystem. But again as you heard me say many times, whether or not it’s about mobility or whether or not it’s about SSDs, these are all complementary technologies that are just expanding the product portfolio of technology that people use, and it grows the overall need for storage across the ecosystem whether or not there is lighter devices that are helping it make people capture things in 4K like the Samsung Note 3 has 4K capture capability, and that eats up a lot of video in an hour or the network effect of being able to share that stuff. At the end of the day, it all ends up on a disk drive or usually three to four of them. So I don’t want to make it seem like it is this net zero sum game, because I don’t think it is at all, I think these are just technologies that are growing the ecosystem, but we do believe there is a role for high-density caching g, which is really what we do with the 5 millimeter drives, and we believe those opportunities are expanding, not decreasing. Joe Wittine - Longbow Research: Great, that’s really helpful. And then I am glad you brought up hybrids , that was my follow-up, just kind of curious where are we innings or however you want to talk about it on the high-end client environment taking a look at hybrid again adopting them, I would assume we are still in the early innings, kind of curious if you can talk through it?

Yes, early innings and actually we have often been surprised a few times over the last five or six quarters in terms of some of the traction that we see with hybrid on desktop and it’s not just gamers. So no, I think the hybrid drive, it’s probably not a great name for – probably some of the different names of hybrid, but I think high performance drives have their role and I think we are still in the mode of thinking the majority of our portfolio is going to be hybrid drives whether or not it’s for aerial density or performance as we look out over the next three or four years. Joe Wittine - Longbow Research: Thank you.

And your next question comes from the line of Jay Noland with Robert Baird. Please proceed. Jay Noland - Robert Baird: Okay, great. I wanted to follow-up on the hyperscale drive opportunity, Steve, it sounds like it’s in lumpy and a certain degree of limited visibility right now, I wonder if that’s a function of just the product cycle at this point or maybe R&D that’s involved, but your outlook, your thoughts on the full year calendar ‘14 as it relates to this part of the market?

Well, I mean, we are still encouraged by the outlook for the full year. And I think that this is a market, where small unit TAM variances can have big implications. I mean, the community, the investor community sometimes moves the driver to driver to drive, a million notebooks drives is just like a million nearline drives and that’s not in lot of case in terms of lead time, ability to respond revenue or profits associated with and some of that is related to the technology and some of it's related to the test. We’re still confident that 2014 is going to be a positive year in terms of deployment and cloud infrastructure what it means for the growth related to nearline drives. I do think that there is this added variable that the big users of this technology realize that they can’t take nine or more months to deploy the assets because they get into this very difficult situation where they are making estimates about cloud infrastructure and not just storage, right, but everything that goes into the infrastructure. Cloud infrastructure is nine months out to satisfy a quality of service for users and that’s just too long of a lag and so you get this thing of it's not really about in quarter demand it's about how well did you predict demand was going to be three quarters ago and it's costly. I mean that’s all inventory that basically they laid out capital for, they haven't started generating revenue. So it's an intense focus clearly at the big buyers of this capital especially if you’re spending 1, 2, 3, 5, $7 billion a year on it to get that stuff in the production much quicker and I think there has been success. As we look at our customer base and the big purchasers of those systems, again whether or not it's through OEM or direct I think that time of deployment is actually compressing which is allowing them I think to use some of that inventory that they bought a couple of quarters ago to bring it online quicker and we will see if that features holds out but we’re still bullish about the Russell calendar year especially actually when you think about the 4K deployment and a lot of the technologies that were shown down at CES whether or not it was actual high density captured equipment or high density viewing [ph] equipment or some of the technologies being shown to assist big data analytics, biometrics and various other technologies. It all talks to an increasing need for people to keep the data. We’re still bullish about it and that’s why we’re not pulling back on how we invest in that infrastructure because I think it's going to be the situation where again if the industry is faced with a 1 million or 2 million unit upside on nearline in the quarter the industry can’t respond to that. If it's faced with a 1 million or 2 million unit upside on notebook we can probably respond to that in two weeks, that’s how different those two markets are. So we’re going to stay focused on making sure that we can deliver till it's upsides as they come.

The next question comes from the line of Steven Fox with Cross Research. Please proceed. Steven Fox - Cross Research: Just a couple of questions from me, first of all, looking at this current calendar year in terms of Exabyte growth, how confident are you in achieving 30% type of growth rate for those shipments and any color on how the mix might be changing between on an average capacity and then secondly I know you’re not talking about Xyratex specifically but can you just sort of outline your plans for say moving upscale into more of a storage systems offering overtime and how that fits with your strategy? Thanks.

Yeah we’re not going to respond to this second question because that could be too closely related to the Xyratex’s acquisition, I rather just not tread that line while we’re under review. On the first one I think we’re confident that the data growth rates are still in excess of 30%. Again I think it comes back to infrastructure that’s being installed and deployed relative to original expectation. So we will have to keep an eye on it. The industry does a great job obviously of keeping track of the Exabytes it ships but that’s not quite the same as the Exabytes that have been put in production by the various cloud companies and we’re trying to get a better handle on that directly with some of the relationships we have been through our OEMs but we still believe the growth rates are in excess of 30% a year. I would expect that the average capacity per drive crosses over terabyte sometime this year and we always think about the cloud but again one of the biggest drivers of the average capacity per drive calculations, what’s going on in the consumer front? You know where people are taking 2 and 3 and 4 terabyte drives into their homes pretty rapidly and we see that continuing as well. So we are still a lot confident that we have good growth in average capacity per drive and that we have petabyte growth rates in excess of aerial density growth rates, which puts pressure on us from an ability to deliver the petabytes required. Steven Fox - Cross Research: Great. And then just real quick, in terms of the PC industry serve this bottoming that we have all been talking, is there from your PC any differences in terms of client versus enterprise we should pay attention to over the next couple of quarters? Thanks a lot.

I mean, yes, it’s been bottoming for a while, I am not sure what a bottom is when it’s been bottoming for five or six quarters, but it does feel overall, I would say, it feels better, demand feels better. And maybe on a relative basis, it feels better in client than it has, but I’d say across the board, business feels a little better. The caveat I would put on it is in the last five years, its felt better three to four times and it seems to have always felt better right about now. And then right about May or June, it feels not as better. So I am hopeful because it hasn’t felt like this in a while I guess. I don’t know that last year it felt better at this time. So I think in that sense, I am encouraged or we are encouraged, but we are cautious that we can always flex to the upside. Again, the industry in this range of whether or not it’s 132 or 144 that’s easy for the company, the industry to respond to. So – and I don’t think we are going to break out from that one way or the other this quarter or probably next. So we are pretty cautious things from how we are going to plan our production. That being said, it probably feels better than it has in the last couple of years. And maybe the relative strength is in the client that might reflect a better macroeconomic condition for regular people instead of just big governments and big companies that could borrow at zero percent and buy the stuff they need to keep the companies and governments running. Steven Fox - Cross Research: Great, thank you very much.

And your next question comes from the line of Sherri Scribner with Deutsche Bank. Please proceed. Sherri Scribner - Deutsche Bank: Hi, thanks. I just wanted to dig into the expenses this quarter a little bit higher than I think at least I was expecting, I know you have commented Steve that they are going to be up a little bit, they are going to be flat next quarter, can you give us a little detail on why they were up and do you expect them to come back down into your targeted range of 12% to 14% of revenue in the next couple of quarters? Thanks.

I will let Pat handle that. Pat O’Malley: Yes. So, sure, yes, I do expect to come back down as you see in the financials, we have talked about last quarter doing a little reshaping, so we certainly went off to reshape the P&L where we took minor restructuring charge, but we continue to shape that to stick in the 12% to 14%, but we do want to continue to make some investments as Steve and Rocky commented on getting deeper relationship with the customers, that’s just not in the go-to-market, but that’s also in a technology engagements, whether it’s IP, whether it’s working with them or whether it’s product offering, that’s all in front of us. So I think there is good opportunity. So we are going to keep those investments. The other small piece about that is that we have a deferred comp trust that you had some about $5 million to $6 million more in OpEx this quarter than you normally would have that offsets an OIE, so that’s – that will disappear, so that will be normalized in the future. So that was a little harder, but that wasn’t really P&L harder, that was just a category. So what we do, we are committed to that 12% to 14% and we see some of these investing’s for a good business model or revenue stream in the future, that’s why we are going to keep those investments. Sherri Scribner - Deutsche Bank: Okay, thank you. And then just I just want to need a little more detail on your SSD strategy, I know we talked about hybrids, but maybe if you give us some detail on what you are seeing with your SSDs and how that’s going? Thanks.

Sure. This is Rocky Pimentel. So we continue to make great progress on our organic SSD initiatives. We also have a very robust portfolio of inorganic initiatives on the SSD side. We look at our solid state storage business as a portfolio. So it’s the pure SSDs plus the success in the hybrid. And on the hybrid side, we have been succeeding in not just the client level, but also at the low end of the enterprise level on hybrid adoption. So what we are looking at is a complete portfolio, but believe me we are making serious investments in our organic efforts on the pure SSD side. We continue to make progress, did design wins and some of our inorganic portfolio opportunities are really looking interesting and as they mature we plan to share a little bit more detail about them but at this point I think we feel a need for some confidentiality due to competitive concerns and so we will keep those things under tap until a future day.

The next question comes from the line of Ananda Baruah with Brean Capital. Ananda Baruah - Brean Capital: I was wondering if you could give us your view on cash priorities for calendar ’14 and maybe talk a little bit about what we should expect for allocation between dividend and buybacks in ’14? And then maybe just lastly comment on sort of how you think about share repurchase, does it meet through the year? Thanks a lot.

So obviously our biggest message is returning the best fashion of capital to shareholders and given as we have talked about we are pretty much on target for the 7% this year so that’s important. Now giving guidance for next year obviously the dividend in a buyback program will be active. We do have an active buyback program, authority to do so and it will remain active. Now the split and how we’re going to manage that, we will probably look over the course the remaining part of this fiscal year for June and will get more clarity but I think what your reference is we had it go 250 obviously that was put in place when stock price was well different from it's today but we’re still committed to the stock buyback program and the dividend and both of them will be vehicles as Steve also alluded we will continue to look at opportunities whether it's an IP or other assets that we will look at but that’s all we will probably be needed on it and we will stay committed to the 70% but this share will probably come with greater clarity in due time on how we want to breakout the dividend and the buyback. Ananda Baruah - Brean Capital: I guess and just second one for me. How should we think about free cash flow generation or how you’re thinking about in ’14 you know cash conversions like all you know think you can do to grow free cash flow?

I think right now our cash conversion side we’re pretty comfortable, could move it for a couple of more days we could but as Dave said we’re managing the inventory on just the tactical but a strategic where we want to setup some things. I think we have a good understanding of the cash flow on the margin it might change a couple of days but for the cash flow I don’t think you should plan up difference than you’ve seen recently. As Dave talked about, we’re living in the world sort of a set range and we’re committed to staying in a target margin range and for the products that continue to generate the cash flow you’ve seen over the last several quarters.

The next question comes from the line of Monika Garg with Pacific Crest Securities. Please proceed. Monika Garg - Pacific Crest Securities: First question on the Kinetic solution maybe can you talk about just sampling or is it solution in the produce type stage and when they expect the revenue recognition? And also since the solution competes with often kind of storage OEMs. Do you think it's going to impact your relationship with the storage OEMs?

I will say couple of things firstly we’re shipping this is the technology development platform right now so we’re shipping it largely to a developers community. There is a lot of interest amongst customer base but we ship 6000 CTUs [ph] now so that people can get developing on these platforms that is not usually one drive at a time since it's a network drive. Their (indiscernible) a number of these things together but there is a lot of software host level development that has to happen in order to enable solution. So the cycle if you will the developmental cycle has been very long to that host side. A lot of people have a lot of interest because they see the opportunity to save money on the host side. Does it challenge our customers? Architecturally it challenges but I think at the end of the day some of those architectures need to be challenged for lower, lower cost. The host will enable the architectures and also the drive. Architecture is still, you know I think the customer ultimately once the, since the whole development platform matures then those customers will be able to take advantage of it and deploy it as they seek it.

This is Rocky Pimentel just to add on to Dave’s comments, with our existing cloud service provider customers and our OEMs customers are clearly very interested and have cost [ph], as Dave mentioned I think also an emerging set of customers in the telecom space and the content delivery network space and also coming to the forefront team, this is a big opportunity for their future infrastructures as well. So it’s a pretty exciting space for us to get new customer.

Yes, a lot of work left to do I think, but it’s going to be quite some time before we monetize it. Monika Garg - Pacific Crest Securities: Then as a follow-up, I mean, on the Analyst Day, you talked about organic revenue growth target 3% to 4%, it depends it’s kind of in the units which you talked about 130 to 140ish moving units, do you think it is still possible to realize that revenue growth? Pat O’Malley: This is Pat. Over time, absolutely, because we fundamentally believe in the data storage trends out there that Steve talked about that the deployment maybe somewhat soft one quarter, stronger the next, but over a period of time, it will show up. And as folks deploy this capital and start utilizing and filling these up, that’s going to drive more growth. And so as it sits today, we are probably living in this range and we will continue to live in this range, but longer term, we do think it breaks out eventually clearly in the storage, how much storage we are shipping, but that eventually the industry is going to have to make some investments in capacity that we have made for the last several years. Monika Garg - Pacific Crest Securities: Thank you. That’s all from me.

Your next question comes from the line of Rich Kugele with Needham. Please proceed. Rich Kugele - Needham: Good afternoon. Just a couple of questions from me. In terms of share count Pat for the fiscal third quarter what should we be assuming? And then on the OpEx side, is the guidance flat in absolute dollars relative to the second quarter or should we be backing out the incentive comp? Pat O’Malley: So you could back out there incentive comp, Rich and outside that would be relatively flat. And then on the diluted shares for next quarter that is 2.41 [ph]. Rich Kugele - Needham: Okay. And then lastly just Steve conceptually as you look at your exabyte shipments and the growth of that relative to your aerial density improvements within Seagate, would you expect that you would be able to outpace the industry’s ability to ship exabytes with drives like the 6 terabyte, is that what the extra OpEx is going through, any thoughts on over the next four quarters how Seagate trends relative to aerial density growth on the exabyte side?

No, I don’t think. I think the industry is competitive across the board in terms of how it invest in the aerial density, if you will have not just for me to say, yes, we are better than those guys. I think the industry is working as hard as they can to drive aerial density in this 20% range, which is not enough to keep up with the demand side. We hope to do it better than our competitors whether or not, that shows up in aerial density or quality or costs or all three or responsiveness which is where we tend to be quite good as responsiveness in the quarter. I think the OpEx investments are in some of these areas, other areas that we pointed out which related to the mobile and cloud and open source side, you saw some of what we have been on the mobile side both within our own technology as well some of the announcements made at CES. So I think those opportunities are little different. I think the storage industry is in this beneficial phase right now where the opportunities in front of the providers of storage devices are pretty significant and they are pretty broad. And I think each company will probably pursue them a little bit differently as a result. So as a result it may not be as easy to say well, WD Hitachi looks like this and Seagate looks like that and Toshiba looks like that, but I think each of these companies is going to take advantage of their own skills and leverage those into an opportunity set that’s pretty broad. And so for us, we are investing in some OpEx areas that laid again, we have been transparent about but they relate to mobile, cloud and open source, but we haven’t been so transparent, because we view it as highly competitive in terms of how we are going about taking advantage of the long-term trends. But to your base question, we believe it’s absolutely fundamental that we remain competitive and hopefully the leader in our core technology of HDD, hybrid and SSDs. So, yes, we have a lot of investment going in that area and then we have others investments surrounding those areas that as we are successful there, will allow us to broaden our value proposition to a widening customer base.

The next question comes from the line of Scott Schmidt with Morgan Stanley. Scott Schmidt - Morgan Stanley: Aside from the test equipment with Xyratex, you see other areas of opportunity to further vertically integrate or make further supply chain improvements and maybe as a follow-up on that I think a while back if we go post the flood there was a certain amount of com componency [ph] or sourcing externally. Is there an update on that? Anything else that can drive further margin improvement?

I think what we focus on more is continuing of supply and obviously if the market went up a lot then we have to ask ourselves this questions right now the model is not going to change relative to how much we outsource, it will be more discussions about continuity supply.

I think the lessons of the flood and the tsunami, earthquake before that really have to do with the systems that we put in place with our suppliers and with our customers and those have been big investments that we will continue to make. I mean we do believe that we have driven a fair amount of operational efficiency as a result of some of those programs and we think there is more to come. So accelerating the flow of the technology from our supplier base to our factories to our customers, saves everyone a lot of money and I think Seagate has made real progress but it's also, it's taken big investments in people, in technology and systems and even investments in our suppliers and in our customers from an engineering perspective and IT perspective and time spent So, I think that will continue. Scott Schmidt - Morgan Stanley: Got it and just if I can follow-up on the branded business. Can you just talk about whether the strength came from more the retail side of things or if you’re seeing some strength in the SMB NAS Market and what the kind of margin profile of that is or implication of that is?

This is Rocky Pimentel again, definitely strengthen in the NAS side of the business in retail or in branded. I would say we did well in the December quarter despite the fact we felt we could have had a stronger portfolio. We were late in one of our critical ramps in the branded business. It's a high capacity product and which could have brought better margins to the portfolio for branded and as we enter this quarter that weakness has been remediated and so I’m looking forward to seeing how we can compete in the marketplace at the high end which is a margin rich sector of the branded retail business.

Can we take one more question?

Your last question comes from the line of Nehal Chokshi with Technology Insights Research. Nehal Chokshi - Technology Insights Research: I want a follow on branded here and focusing on the consumer side than the NAS side. Are you seeing an appetite for consumers upgrading to what is effectively a personal cloud offering rather than simple backup drive? And I might have a follow-up question based on that answer.

No question, consumers are very interested in NAS solutions at the home level. I mean this is an opportunity for growth in the future which we’re pretty excited about you will see more and more of our product announcements around that. We talk about release of our most recent wireless drive at CES, under the LaCie brand which is really a great production. So no question if that’s a category that will continue to grow in the branded retail space. Nehal Chokshi - Technology Insights Research: So what do you feel can be the incremental TAM opportunity as consumers take that wireless product effectively in personal cloud?

We don’t put specific numbers on it. It's still an emerging segment of the branded retail TAM I mean direct attached storage is still it's a bigger segment of that TAM but we still, we see definitely shifts more towards NAS capable retail solutions and I don’t think we’re going to declare million to unit next quarter but this quarter but it's a growing demand by the consumer that we will try to service to the best of our ability. Nehal Chokshi - Technology Insights Research: It does appear you know as people expand the eco-system with tablets and use those devices more and more that the attach rate for tablets is much higher than it was for desktop or high-capacity notebooks. There is some market data that shows those attach rates are in the 50% range versus rates I think more in the 10% to 15% range for the desktop side. Notebook side maybe was 15% to 20%. So we do see a big shift in attach rates there. And then what becomes a NAS versus a DAS is an interesting question when you have a bunch of wireless devices. So, yes, we think there is opportunity there, but again for us I think it’s just part of the expanding ecosystem and these mobile devices obviously need storage, because there is not a lot you can do even if you are rich person, you can buy a 64-gig tablet, you can gobble that up pretty quickly and you have to store all that great high-def video somewhere. So it’s our job to make sure that the technology we deliver is easy to use. I think that’s where the industry probably hasn’t done well. And competitively where you probably see both of the major players, WD and Seagate focusing a lot of energy, Seagate through both LaCie and our brand, WD through both of their brands, but I think clearly the ease of use issues around managing storage for your connected devices is a big opportunity for all of us and to the extent that we are successful it should drive significant amount of revenues and profits, if not tens of millions of units.

Thank you. I want to thank everyone for taking time, being on the call today and we look forward to talking to you next quarter. Thanks a lot.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.