Maxtor drives in reverse

Disk-drive maker Maxtor posted on Wednesday a quarterly net loss of $26.1 million, following rival Seagate Technology into the red.

Maxtor reported revenue of $818.3 million for the quarter ended June 26 and said its loss excluding certain items was $45.8 million, or 19 cents per share. Analysts on average had been expecting a quarterly loss per share of 18 cents, according to tracking company Thomson One Analytics. In the second quarter of 2003, Maxtor had net income of $6.2 million and revenue of $910.9 million.

"Our second-quarter financial performance reflected extremely aggressive pricing during the quarter and a shortfall in our unit volume," CEO Paul Tufano said in a statement. "Pricing during the seasonally weak second quarter, especially on desktop drives, was very competitive, and our average selling price fell from $75 in the first quarter to $71 in the second."

On Tuesday, Seagate Technology reported a net loss of $33 million for the quarter ended July 2 and said the industry "is still facing challenging times."

Maxtor on Wednesday said it cut about 450 positions. The company had said it planned to cut between 400 and 500 jobs. Seagate also has announced job cuts.

Investment firm Hoefer & Arnett downgraded Seagate shares from "hold" to "sell" on Wednesday. Mark Miller, analyst at the firm, said Maxtor is facing not only industry pricing woes but also a difficulty specific to the company. "Maxtor's got...a problem with Dell," he said.

Maxtor confirmed that it had a hitch with Dell related to 40GB drives. The company said it had a "lost opportunity" of between 1 million and 1.3 million drives in the second quarter, and expects a similar result in the current quarter.