Collins Stewart Downgrades Seagate Technology (STX) to Sell, Negative on CEO Departure and PC Sales

January 13, 2009 9:20 AM EST

Collins Stewart downgrades Seagate Technology (NYSE: STX) from Buy to Sell.

Collins analyst says, "STX announced in its 8-K (filing) the departure of its CEO and COO. Steve Luczo, the Chairman and ex-CEO, will take over the helm. This change is not for the better. The Company also announced a 10% head count reduction in its domestic operation in an effort to lower break even levels...We believe that there is significant downside risk to current F09 street estimates of $0.19. A stressed balance sheet, net debt of $2/share, creates additional risk...Seagate depends on the PC markets for over half its revenues. Despite the weak finish to the year, PC demand (sell through) will remain well below seasonal patterns through summer. We expect PC industry revenues to decline mid-to-high teens in 2009."

Seagate Technology is engaged in the design, manufacture and marketing of hard disc drives. Hard disc drives, which are referred to as disc drives or hard drives, are used as the primary medium for storing electronic information in systems ranging from desktop and notebook computers, and consumer electronics devices to data centers delivering information over corporate networks and the Internet.

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