Western Digital Shares Up on Meeting Revenue Expectations, Misses Profit TargetWednesday, April 20, 2011
Shares of Irvine’s Western Digital Corp. rose on Wednesday after the maker of disk drives for computers, servers and consumer electronics reported results for the March quarter that met Wall Street’s revenue expectations.
Investors sent shares up nearly 3% in afterhours trading, to a market value of about $9.4 billion, despite a year-to-year dip on revenue and a near miss on profit expectations.
Investors appear to have figured a slowdown in demand and the affects of Japan's recent earthquake in assessments of Western Digital's results.
Western Digital's revenue of $2.25 billion for the three months through March was down 14.7% from a year earlier as sales of hard-drive units fell.
The company said it shipped 50 million drives in the March quarter, down 2% from a year ago.
The company's profit of $146 million, down 64% from a year earlier, missed analysts’ average estimate of $150 million.
President and Chief Executive John Coyne said the hard drive industry was impacted in the March quarter by the delayed supply of computers to manufacturers and the disaster in Japan.
“While demand for hard drives in the quarter got off to a slow start, it later picked up as availability of CPUs improved and as fears took hold of component shortages related to the events in Japan,” he said.
The quarterly results included a $10 million expense associated with the pending acquisition of Hitachi Global Storage Technologies, announced in early March.
The $4.3 billion deal, expected to close in the third quarter, is set to make Western Digital the undisputed leader in drives. The company now leads by number of drives shipped but is second in revenue to archrival Seagate Technologies LLC, which sells more corporate drives.
"In relation to our planned acquisition of Hitachi GST, we are in the approval process with all required regulatory agencies, our integration planning is well underway and we have successfully syndicated the loan financing associated with the transaction," Coyne said.
For the current quarter, analysts are expecting Western Digital to post adjusted profits of $150 million on sales of $2.23 billion.
The company did not release any guidance on the current quarter.