711039--2/22/2006--MAXTOR

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Obtaining required approvals and satisfying closing conditions relating to the Seagate merger or other developments may delay or prevent completion of the merger. Customer, supplier, distributor and partner uncertainty about the merger or general effects of the merger on our customer, supplier, distributor and partner relationships could harm us or the combined company, whether or not the merger is completed. Diversion of management attention to the merger and employee uncertainty regarding the merger could adversely affect our business, financial condition and operating results. Because our stockholders will receive a fixed ratio of 0.37 of a share of Seagate common stock for each share of Maxtor common stock that they own at the closing of the merger, if Seagate s stock price decreases for any reason, our stockholders will receive less value for their Maxtor shares. The combined company may not realize the anticipated benefits from the merger. Under the terms of the 2.375% Convertible Senior Notes due 2012, our merger with Seagate Technology will trigger conversion rights that, if exercised, may have an adverse effect on the liquidity of the combined company. Risks Related to Our Business We have a history of significant losses. The decline of average selling prices in the hard disk drive industry could cause our operating results to suffer and make it difficult for us to achieve or maintain profitability. Intense competition in the hard disk drive market could reduce the demand for our products or the prices of our products, which could adversely affect our operating results. If we fail to qualify as a supplier to computer manufacturers or their subcontractors, then these manufacturers or subcontractors may not purchase any units of an entire product line, which will have a significant adverse impact on our sales. The loss of one or more significant customers or a decrease in their orders of our products would cause our revenues to decline. If we do not expand into new hard drive markets, our revenues will suffer. Our efforts to improve operating efficiencies through restructuring activities may not be successful, and the actions we take to this end could limit our ability to compete effectively. Because we are substantially dependent on desktop computer drive sales, a decrease in the demand for desktop computers could reduce demand for our products. If we do not successfully introduce new products or avoid product quality problems, our revenues will suffer. If we do not expand into new technologies, our revenues will suffer. If we fail to develop and maintain relationships with our key distributors, if we experience problems associated with distribution channels, or if our key distributors favor our competitors products over ours, our operating results could suffer. Our customers have adopted a subcontractor model that increases our credit risk and could result in an increase in our operating costs. If we fail to match production with product demand or to manage inventory, our operating results could suffer. Because we purchase a significant portion of our parts from a limited number of third party suppliers, we are subject to the risk that we may be unable to acquire quality components in a timely manner, and these component shortages could result in delays of product shipments and damage our business and operating results. We purchase most of our components from third party suppliers, and may have higher costs or more supply chain risks than our competitors who are more vertically integrated. If we have difficulties with the transition of manufacturing to China or a disaster occurs at one of our plants, our business, financial condition and operating results could suffer. We are subject to risks related to product defects, which could subject us to warranty claims in excess of our warranty provision or which are greater than anticipated due to the unenforceability of liability limitations. Our quarterly operating results have fluctuated significantly in the past and are likely to fluctuate in the future. We face risks from our substantial international operations and sales. Our operations and prospects in China are subject to significant political, economic and legal uncertainties. We may need additional capital in the future which may not be available on favorable terms or at all. The loss of key personnel or inability of our senior management team to work together effectively could harm our business. We significantly increased our leverage as a result of the sale of convertible senior notes. Under the terms of the 2.375% Convertible Senior Notes due 2012, events that we do not control will trigger conversion rights that, if exercised, may have an adverse effect on our liquidity. Any failure to adequately protect and enforce our intellectual property rights could harm our business. We are subject to existing claims relating to our intellectual property which are costly to defend and may harm our business. We could be subject to environmental liabilities which could increase our expenses and harm our business, financial condition and results of operations. Our customers are subject, and we are potentially subject, to new environmental legislation enacted by the European Union and, if we do not comply, our sales could be adversely impacted. The market price of our common stock fluctuated substantially in the past and is likely to fluctuate in the future as a result of a number of factors, including the release of new products by us or our competitors, the loss or gain of significant customers or changes in stock market analysts estimates. Decreased effectiveness of equity compensation could adversely affect our ability to attract and retain employees, and proposed changes in accounting for equity compensation could adversely affect earnings. Anti-takeover provisions in our certificate of incorporation could discourage potential acquisition proposals or delay or prevent a change of control.

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711039--2/22/2006--MAXTOR_CORP