Bear Stearns Lowers Seagate Technology to 'Underperform'

Analyst Naveen Bobba sees more aggressive industry pricing conditions ahead for storage-device makers

Bear Stearns downgraded Seagate Technology (STX ), Maxtor Corp. (MXO ), and Western Digital (WDC ).

Analyst Naveen Bobba say he cut his ratings on Seagate and Maxtor to underperform, from outperform, and lowered Western Digital to underperform, from peer perform, as more aggressive industry pricing conditions are ahead for these storage-device makers.

Bobba says the industry appears to have returned to a focus on market share, with no significant capacity or technology driven constraints on desktop supply in the near term. He doesn't see an increase in channel inventories in this seasonally soft period of the year.

He cut Seagate's $1.63 fiscal 2004 (Jun.) earnings per share estimate to $1.26, and cut the $1.72 fiscal 2005 earnings per share estimate to $1.12. He's reviewing Maxtor's 74 cents estimate for 2003 andthe 94 cents estimate for 2004. For Western Digital, Bobba is also reviewing the 98 cents fiscal 2004 (Jun.) estimate and the $1.11 fiscal 2005 estimate.

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