UPDATE 3-Seagate CEO says drive market may have hit bottom

* Fiscal Q3 adjusted loss 45 cents a share

* Sees Q4 net loss of 37-47 cents a share

* Sees return to profitability in FY 2010

* CEO sees sector bottoming, if no shocks

* Stock down 1 pct after hours (Adds CEO's comments)

SAN FRANCISCO, April 21 - Seagate Technology lost money in its third quarter but its top executive held out hope on Tuesday that sliding hard drive sales may have bottomed.

Chief Executive Steve Luzco said his company, which competes with Western Digital and Fujitsu in a global disk drive arena, will post a profit in fiscal 2010, thanks to an internal overhaul aimed at reducing costs.

He added that the June quarter was typically his company's weakest, but at present he saw sales staying flat from the previous quarter.

"It is unusually relatively strong," he said in an interview with Reuters. "It is probably a decent signal that -- unless there is some other significant shock, whether it's macro or micro -- that we've probably found a bottom here."

The world's top disk drive producer posted on Tuesday a third-quarter loss of 45 cents, excluding special items, versus a Wall Street average forecast for the same.

Analysts pointed to aggressive cost-cutting as a key factor behind the improving bottom line, but said corporate spending on technology -- Seagate's main fount of revenue -- remained hesitant and the growing popularity of netbooks meant potentially lower margins.

Luzco swept aside such concerns.

"We're trying to structure the company to be profitable even at these levels, and to improve the gross margins from where they are," he told Reuters.

Seagate foresees a net loss in the fiscal fourth quarter of 37 cents to 47 cents a share, including 8 cents per share for restructuring charges.

Its shares dipped 1 percent in after-hours trading from a regular close of $6.67 on Nasdaq.

CAUTION PREVAILS

Luzco said he now faces the challenge of trying to cut back utilization at the company's factories, while leaving enough capacity in case demand bounces back.

"The de-stocking trend is behind us," said Ashok Kumar at Collins Stewart. "Shipments should match consumption."

Amit Daryanani of RBC Capital Markets said: "Things are more or less in seasonable trends," he said.

Kumar said that with Windows 7 around the corner there could be some increase in computer unit sales, but that may not provide a huge boost to Seagate because many of the machines sold will be netbooks with lower-end disk drives.

In addition, Kumar said enterprises are still dragging their feet on IT spending.

Seagate reported revenues of $2.15 billion for its fiscal third quarter, bettering an average forecast of $1.99 billion.

It posted a net loss of $273 million, or 56 cents a share, for the quarter ending April 3, after a year-ago net profit of $344 million, or 65 cents a share.

The company sees fourth-quarter revenue outpacing its own expectations, at $1.9 billion to $2.2 billion.