1137789--8/19/2009--Seagate

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Risks Related to our Business Current Macroeconomic Conditions The recent downturn in the macroeconomic environment has, and may continue to, negatively impact our results of operations. Competition Our industry is highly competitive and our products have experienced and will continue to experience significant price erosion and market share variability. Principal Competitors We compete with both independent manufacturers, whose primary focus is producing technologically advanced disk drives, and captive manufacturers, who do not depend solely on sales of disk drives to maintain their profitability. Volatility of Quarterly Results Our quarterly results of operations fluctuate, sometimes significantly, from period to period, and may cause our share price to decline. New Product Offerings Market acceptance of new product introductions cannot be accurately predicted, and our results of operations will suffer if there is less demand for our new products than is anticipated. Smaller Form Factor Disk Drives If we do not continue to successfully market smaller form factor disk drives, our business may suffer. Seasonality Because we experience seasonality in the sales of our products, our results of operations will generally be adversely impacted during the second half of our fiscal year. Difficulty in Predicting Quarterly Demand If we fail to predict demand accurately for our products in any quarter, we may not be able to recapture the cost of our investments. Dependence on Supply of Components, Equipment and Raw Materials If we experience shortages or delays in the receipt of critical components, equipment or raw materials necessary to manufacture our products, we may suffer lower operating margins, production delays and other material adverse effects. Importance of Time-to-Market Our results of operations may depend on our being among the first-to-market with new product offerings and achieving sufficient production volume with our new products. Industry Demand Poor global economic conditions and changes in demand for computer systems and storage subsystems have caused and may cause in the future a decline in demand for our products. Dependence on Distributors We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of our sales. Dependence on Sales of Disk Drives in Consumer Electronics Applications Our sales of disk drives for consumer electronics applications, which have contributed significant revenues to our results, can experience significant volatility due to seasonal and other factors, which could materially adversely impact our future results of operations. Dependence on Sales of Disk Drives Directly to Consumers Through Retail Outlets Our sales of disk drives directly to consumers through retail outlets can experience significant volatility due to seasonal and other factors, which could materially adversely impact our future results of operations. Importance of Controlling Operating Costs If we do not control our operating expenses, we will not be able to compete effectively in our industry. Impairment Charges We may be required to record additional impairment charges for goodwill and/or other long-lived assets. Dependence on Key Customers We may be adversely affected by the loss of, or reduced, delayed or cancelled purchases by, one or more of our larger customers. Impact of Technological Change Increases in the areal density of disk drives may outpace customers' demand for storage capacity. Changes in Electronic Data Storage Products Future changes in the nature of electronic data storage products may reduce demand for traditional disk drive products. New Product Development and Technological Change If we do not develop products in time to keep pace with technological changes, our results of operations will be adversely affected. Substantial Leverage Our substantial leverage may place us at a competitive disadvantage in our industry. Significant Debt Service Requirements Servicing our debt requires a significant amount of cash and our ability to generate cash may be affected by factors beyond our control. Restrictions Imposed by Debt Covenants Restrictions imposed by our amended credit facility and the indenture governing our 10% Senior Secured Second-Priority Notes due 2014 may limit our ability to finance future operations or capital needs or engage in other business activities that may be in our interest. Substantially all of our Assets are Pledged as Collateral to Secure Certain Indebtedness Since substantially all of our assets are used to secure portions of our existing debt obligations, we may be limited in our ability to incur additional indebtedness or to provide additional credit support, and if we fail to meet our payment or other obligations under certain of our existing debt obligations, the lenders thereunder could foreclose on, and acquire control of, substantially all of our assets. Volatile Public Markets The price of our common shares may be volatile and could decline significantly. Purchase Commitments to Certain Suppliers If revenues fall or customer demand decreases significantly, we may not meet all of our purchase commitments to certain suppliers. Perpendicular Recording Technology Products based on perpendicular technology require increased quantities of precious metals and scarce alloys like platinum and ruthenium, which increase the risks of higher costs and production delays that could adversely impact our results of operations. Risks Associated with Future Strategic Alliances, Joint Ventures or Investments We may not be able to identify suitable strategic alliances, acquisitions, joint ventures or investment opportunities, or successfully acquire and integrate companies that provide complementary products or technologies. Risk of Intellectual Property Litigation Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products. We are currently subject to lawsuits involving intellectual property claims which could cause us to incur significant additional costs or prevent us from selling our products, and which could adversely affect our results of operations and financial condition: actions brought in the United States by Convolve, Inc. and the Massachusetts Institute of Technology; Qimonda AG; and Siemens AG, which Seagate won at trial and is now on appeal,; and an action brought in Northern Ireland by Siemens AG. Dependence on Key Personnel The loss of some key executive officers and employees could negatively impact our business prospects. System Failures System failures caused by events beyond our control could adversely affect computer equipment and electronic data on which our operations depend. Economic Risks Associated with International Operations Our international operations subject us to risks related to currency exchange fluctuations, longer payment cycles for sales in foreign countries, seasonality and disruptions in foreign markets, tariffs and duties, price controls, potential adverse tax consequences, increased costs, our customers' credit and access to capital and health-related risks. Political Risks Associated with International Operations Our international operations subject us to risks related to political unrest and terrorism. Legal and Operational Risks Associated with International Operations Our international operations subject us to risks related to staffing and management, legal and regulatory requirements and the protection of intellectual property. SOX 404 Compliance While we believe that we currently have adequate internal control procedures in place, we are still exposed to future risks of non-compliance and will continue to incur costs associated with Section 404 of the Sarbanes-Oxley Act of 2002. Suspension of Paying Quarterly Dividends Our policy of not paying dividends could result in a persistently low market valuation of our common shares. Potential Governmental Action Governmental action against companies located in offshore jurisdictions may lead to a reduction in the demand for our common shares. Securities Litigation Significant fluctuations in the market price of our common shares could result in securities class action claims against us. Current Global Credit and Financial Market Conditions Current global credit and financial market conditions could negatively impact the value of our current portfolio of cash equivalents, short-term investments or auction rate securities and our ability to meet our financing objectives. Environmental Regulations Failure to comply with applicable environmental laws and regulations could have a material adverse effect on our business, results of operations and financial condition.

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1137789--8/19/2009--Seagate_Technology