Good morning, and welcome to the Seagate Technology fiscal fourth quarter and year-end 2015 financial results conference call. My name is Danielle, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question and answer session. As a reminder, this conference is being recorded for replay purposes. At this time, I would like to turn the call over the Kate Scolnick, Vice President, Investor Relations. Please proceed, Kate.

Thank you. Good morning, everyone, and welcome to today's call. Joining me today from Seagate's executive team are Steve Luczo, Chairman and CEO; Pat O'Malley, Executive Vice President and CFO; Dave Mosley, President, Operations and Technology; Rocky Pimentel, President, Global Markets and Customers; and Phil Brace, President, Cloud Systems and Electronic Solutions. We've posted our press release and detailed supplemental information about our fourth fiscal quarter and year-end 2015 on our Investor Relations site at seagate.com. During today's call, we will review the highlights for the quarter, provide the company outlook for the first fiscal quarter and full year 2016, and then open the call up for questions. We will refer to non-GAAP measures on this call, which are reconciled to GAAP figures in our supplemental information on our website. We are planning for the call today to go approximately half an hour, and we will do our best to accommodate your questions in that timeframe. As a reminder, this conference call contains forward-looking statements about the company's anticipated future operating and financial performance, customer demand, and general market conditions. These forward-looking statements are based on management's current views and assumptions and should not be relied upon as of any subsequent date. Actual results may vary materially from today statements. Information concerning risks, uncertainties, and other factors that could cause results to differ from these forward-looking statements are contained in the company's SEC filings and supplemental information posted on the Investor section of the company's website. I would now like to turn the call over to Steve Luczo. Please go ahead, Steve. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Thanks, Kate. Good morning, everyone, and thank you for joining us today. For the fourth fiscal quarter 2015, Seagate achieved revenues of $2.9 billion, and on a non-GAAP…

Thank you. And our first question comes from Aaron Rakers from Stifel. Your line is now open. Please go ahead. Aaron C. Rakers - Stifel, Nicolaus & Co., Inc.: Yeah, thanks for taking the question. First of all, I was just curious, what was the ending share count coming out of the June quarter? And then the question would be, is – can you talk a little bit about the gross margin drivers this quarter? I think your initial guidance was 28.5%. Can you bridge the gap between how much absorption effect of fixed cost or utilization was an impact versus, say, mix or pricing? Stephen J. Luczo - Chairman, President & Chief Executive Officer: Sure. Let me take the second one while Pat gets the answer to the first one. I think in terms of the gross margin, Aaron, the delta kind of makes sense to us all in all. Probably the biggest change was the absorption issue. So we ran our factories really lean. Our inventory levels are 35% below the competition's right now. And that absorption impact maybe was as much as 100 basis points. So that's significant. I think other issues are – we've only had 24 hours to look at the other results, but it does seem like the competition attained revenue earlier in the quarter by virtue of the DSO, and that usually has a margin impact just because pricing sometimes gets more challenging through the quarter. And it looks also that they probably had some share gain in nearline distribution, which is probably a nice margin advantage as well. And so we're off to kind of decide – figure out where that opportunity lays for us in the next couple of quarters. I think the fourth point is probably that for the non-HDD businesses for both of us, which are $250 million-ish, while I think both of us obviously are running margins below the corporate average, our estimate is that ours are further below, and so we still have work to do there, as we've talked before, over the next couple of quarters to prove that margin profile. So I think the combination of things explains the delta to our original forecast and probably the delta to the competition as well. But the single biggest point was we basically ran our factories really lean and reduced inventory, and that has a big absorption impact. Patrick O'Malley - Chief Financial Officer & Executive Vice President: And on the share count, Aaron, we were at 315 million. We're down to slightly over 300 million right now as we sit. Aaron C. Rakers - Stifel, Nicolaus & Co., Inc.: Okay. Thank you. Patrick O'Malley - Chief Financial Officer & Executive Vice President: And that's actual shares outstanding.

Thank you. And your next question comes from Steven Fox from Cross Research. Your line is now open. Please go ahead.

Thanks. Good morning. Just on non-HDD business, I was wondering if you could provide some highlights on the $250 million, what was doing better. And then also if you made any kind of margin improvement in that non-HDD business during the quarter and how you might have attained that, or is that still on the come? Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yeah, we'll have Phil answer on that. Philip G. Brace - President-Cloud Systems & Electronics Solutions: Yeah, I think that overall the quarter proceeded as expected. We saw a little bit of softness in the overall system business, primarily related to OEM storage-related sales there. I think you see that reflected in other people's reports. Our flash business, particularly in the PCIe business, continues to be strong and a growth driver for us in that space. So when we look out in time, I think we continue to be excited about our growth prospects there, and we'll continue to work to improve the operational performance of the business going forward.

And then in terms of profitability in that area? Any other color? Philip G. Brace - President-Cloud Systems & Electronics Solutions: Well, I think as Steve said, right now it's trailing below the corporate average overall in an aggregate perspective, and I think that we've got a number of levers that we're working to over the coming periods to kind of continue to improve the operational performance of the business.

Thanks. And then just lastly, I know it's not the greatest question to ask after – with PC demand where it is, but in terms of your upside flexibility, given that average capacities are still rising and you're looking to improve profitability, how would you describe your ability to react to some upside surprises over the next couple quarters? Stephen J. Luczo - Chairman, President & Chief Executive Officer: On the client-side?

Overall, just thinking about - Stephen J. Luczo - Chairman, President & Chief Executive Officer: Well, on the client side, it's pretty easy. The lead times are in quarter usually, and the test times are pretty short. So one of the reasons we ran inventories really lean is because at least if the pocket of upside is client, we can chase that very efficiently. Seagate's great at doing that. And as you know, we're also on the front end of a big product rotation in those categories, so it's smart for us keep our inventories really lean as we go into the new cycle, which we're very excited about. I think on the nearline, it's much tougher. Lead times on nearline, between wafer and test, are well beyond 13 weeks. So, unless you're staging inventory, which we can stage some inventory, say, if we're at wafer level or whatever to take some of that lead time out, chasing big upsides on nearline and mission-critical is much more difficult. So it just depends where the products come in.

Great. Thank you very much. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yes, thanks.

Thank you. And your next question comes from Rich Kugele from Needham & Co. Your line is now open. Please go ahead. Rich J. Kugele - Needham & Co. LLC: Thank you. Good morning. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Good morning. Rich J. Kugele - Needham & Co. LLC: I just wanted to get a sense for, you talked about potentially looking at operating expense changes for fiscal 2016 having an effect on second half. What about on the manufacturing side? Do you feel like there's some room there where you could take some capacity out, or is it really not expensive capacity and it's just better to leave it in place? Stephen J. Luczo - Chairman, President & Chief Executive Officer: Well yeah, we didn't say maybe we were going to look at some opportunities. We are going to take actions, so we will be under $500 million exiting the calendar year, Rich, just to be clear on that – I mean per quarter on OpEx. And I do think there's opportunities on the cost of goods side, which we're also looking at. We'll probably have an update for you on that in September. In terms of taking out capacity, which may or may not be an action that the competition's taking, it wasn't quite clear to us what was going on in that restructuring charge. And we didn't really understand the answer, that we don't think that taking out a major asset right now is the right move, just because as you know we still are very bullish on the long-term prospects of exabyte growth, and we're actually bullish on client ultimately, as I've talked before. It just depends how you define client. And we believe there'll be a whole new class of…

Thank you. And our next question comes from Ananda Baruah from Brean Capital. Your line is now open. Please go ahead.

Hey. Thanks for taking the question. And congrats, really nice job on the OpEx. Just one for me if I could. Steve, would love to get your longer-term view on exabyte growth, given the market dynamics that we've seen with XP refresh over the last 12 months. And then would also love to get what your view is on what the different applications are that layer into that kind of growth view over the next couple of years and how it manifests. Thanks. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Well, I think, again, you have to break the market down into the client side and basically the enterprise side, which then breaks into legacy and nearline or cloud service providers. I think on the client side, I think for the next 18 and 24 months it's a tough market. Because the existing definition of client probably isn't going to change much between desktop, notebook, tablet, and phones of two different sizes. And I think the mix-and-match of that client is probably kind of a net-zero-sum game in terms of the trade-offs that people are making in platforms. Now, the trend away from tablets to big phones is probably also going to benefit notebooks, because at some point, you need a bigger platform and a bigger screen to deal with. And then all of those have implications of that they don't have a lot of storage on board. And what I mean by a lot is certainly more than 128, maybe even more than 256. Then you an external storage play, which – we continue to see the exabyte shipments on the branded business exceeding that that goes in the cloud, which people kind of still haven't really focused on. But I do think that in the…

That's very helpful. Thanks a lot. See you in September. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yeah, thanks.

Thank you. And your next question comes from Amit Daryanani from RBC Capital Markets. Your line is now open. Please go ahead.

Thanks a lot. Good morning, guys. Two questions from me. One, Steve, you talked about a non-GAAP EPS growth of 10% next year in fiscal 2016, I guess. Could you just talk about what are your assumptions there? Because it seems like you would get there on the OpEx control and raise share count (22:56) Curious how you think about TAM in context of that EPS growth number. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yeah, what we said, at least, and so our assumptions right now, at a high level, but we want to kind of preserve this for September, because it's a fairly complex story in terms of what's going on underneath the high level. But right now the assumption is for, think of it as a relatively flat revenue TAM. And then to your point, operating expense controls as mentioned. And again don't forget, some of these operating savings don't occur till the second half of the year, so it's a little different than just saying it's all coming from OpEx, because the math actually doesn't say that. But it's generally, you're right generally in terms of direction, and that's why we're confident we can do this, because we can manage the OpEx and we don't think our revenue assumption is wildly optimistic.

Got it. If I just follow up on your systems business, the non-HDD side, you have a couple assets like the controller business from LSI, the enclosures from Xyratex. Do you consider these as core assets to Seagate's systems portfolio as you go forward, or could these be things that you would look to divest to, at least reduce the headwind they cause on your margin profile? Stephen J. Luczo - Chairman, President & Chief Executive Officer: No, those are really great technologies, and they result in really sticky customer relationships. The controller technology in particular is very interesting, because it's flash-agnostic, and for a while I've been kind of marching down a theme that while the conventional wisdom is owning the media is a huge cost advantage and therefore you have to own the media, the reality is only one company can be leading in media, and everybody else by definition is behind. Now someone may just be a little bit behind, and someone may be a lot of bit behind. But if you're running fabs, you're going to keep those fabs open. And if your flash isn't competitive, you got a problem. Whereas with our technology, we could take that controller technology and apply it to whoever has the best flash or the cheapest flash or a combination thereof. And I'm not completely convinced yet that the companies that are actually media independent might have a better advantage long term in certain market segments, certainly not if you're talking about low-grade consumer flash. But certainly stuff that requires workload that we're experts at, we actually like having the optionality. And our controller technology does inform us in terms of our overall system strategy. So the intent obviously is to keep it internal. If someone wanted to pay us $50 billion for it, we'd probably sell it.

Fair enough. Thank you.

Thank you. And your next question comes from Mehdi Hosseini from SIG. Your line is now open. Please go ahead.

Thanks for taking my question. Steve, I want go back to your commentary about a flat top line, and I want to better understand kind of assumptions in different scenarios. On the client side, it seems like the SSD adoption is accelerating, and on the nearline, where there is growth, there is also more competition. You have Samsung that is becoming very aggressive with their new flash technology. They're selling it below cost. And you have different alternative technologies that are also trying to minimize the hardware procurement. And in that context, I want to better understand some of your key assumptions with the cloud and nearline, and how do you see the risk or competition? And then I have a follow-up. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yeah, well, come to September 2 conference, and we'll fill you in on all that. Just one quick answer. There's no one that's using SSDs for storage. I mean, maybe at the margin for replacing boot drives – I mean, maybe 1% or 3% of the hierarchy is SSDs for storage. Most of your flash product is actually not hanging off the storage bus; it's fast memory. So I think you have to be careful about where you're talking about where our devices go versus where flash is used. Most implementations of flash in a data center also have massive amounts of storage, and in fact depending on what application you're running, the flash enabled you to actually need to control more storage because of the type of analytics that you're doing. But that's the whole point of September, and we'll talk about all that then.

That's fair. And then in terms of just accelerating the capacity, do you really need the helium? What is the incremental cost for increasing the capacity per drive, especially for the nearline? Is there any opportunity that you can add more capacity and – being able to drive the growth? Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yeah, it's expensive, and I'll let Dave talk to that. Do you need it? We don't think you need it in the near term. We think 6s and 8s on air are a really compelling product from an overall perspective, whether or not it's acquisition cost or ongoing costs. I'll let Dave talk about that. But if you need to get to 10 terabytes, given our view of technology today at 10 TB and at the discount that we're looking at, you probably need helium. But it's a big cost adder, and then you just have say which markets are willing to pay that? And, Dave, you want to provide any other color? William D. Mosley - President-Operations & Technology: All I'd add is that customers have to make a total cost of ownership decision relative to the power savings that you get from helium, which is nice, versus the cost adders that you're talking about.

Thank you. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yep.

Thank you. And your next question comes from Monika Garg from Pacific Securities. Your line is now open. Please go ahead.

Hi. Thanks for taking my question. Could you, Steve, just discuss the demand trends you're seeing in all your segments, especially in the hyperscale customers? You talked about last quarter that you expect demand to be 60% second half. Is it still the expectation? Thank you. Stephen J. Luczo - Chairman, President & Chief Executive Officer: Yeah, I'm sorry, this will have to be last question, because the market's about open. Yeah, I'd say we're still feeling it's kind of a 60/40 back half to the first half of the year for the nearline cloud service providers. And then overall, as I said, feels pretty flat to us right now. Obviously, generally the second half is stronger. We do have some favorable things in the marketplace between the new Intel chip and Win10, maybe that drives some acceleration. But I was wrong last quarter anticipating that. I don't want to be wrong, at least in the same direction, twice in a row. So we're remaining conservative and just calling for a flat quarter in the other segments. But I do think we will see strength in the nearline. And legacy, as you know, is kind of fits and starts. So we'll see where we're at on legacy. But in general, legacy has been better than people would've anticipated. Stephen J. Luczo - Chairman, President & Chief Executive Officer: All right. Good. I want to thank everyone for taking the time today. And we look forward to speaking to you next quarter, but of course we'll see many of you in September. So thanks very much.