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Western Digital: Profits More Than Double, Sales Surge

Lake Forest’s Western Digital Corp., a maker of disk drives for computers and consumer electronics, on Thursday reported results for the December quarter that blew away analysts’ expectations.

For the three months through Jan. 1, the company reported profits of $429 million, up 246% from a year earlier and beating analysts’ expected $307 million.

It recorded revenue of $2.6 billion, up 44% and beating analysts’ expectation of $2.4 billion.

Western Digital, which had a recent market value of around $10 billion, said it shipped about 50 million disk drives during the quarter, up from 36 million a year earlier.

The company ended the quarter with $2.4 billion in cash and short-term assets.

“For the third consecutive quarter, we increased output in a supply constrained environment, providing strong support of our customers’ growth opportunities, primarily in the consumer segment but, notably, with some emerging strength in the commercial sector,” Chief Executive John Coyne said. “A moderate pricing environment, combined with our passionate focus on cost and efficiency, enabled gross margins of 26%—well above the high end of our model range.”

Wedbush Securites LLC analyst Kaushik Roy is bullish on the disk drive industry as a whole.

“2010 is likely to be the year for hard disk drives,” he said in a research note.

Disk drive makers are benefiting from a combination of factors, including surging demand, stable prices and lean stockpiles.

He upped his estimates for Western Digital yesterday after Scotts Valley-based rival Seagate Technology LLC beat Wall Street’s estimates with its quarterly results.

Western Digital beat Roy’s revised outlook of $352 million in profits on sales of $2.5 billion.

The company didn’t give financial guidance for the current quarter.

Wall Street analysts, on average, are expecting Western Digital to see profits of $252 million on sales of $2.1 billion for the March quarter.

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