Orange County Business Journal

Western Digital Up as Thai Plant Re-Opens

Chris Casacchia Friday, December 2, 2011

The company’s flooded buildings in the region house assembly and testing operations along with a substantial majority of the company’s slider fabrication, which accounts for a key component in disk drives.

Western Digital ships about 60% of its disk drives from Thailand, where it employs some 37,000 people.

Its disk drives go into computers, external storage devices, corporate networks and consumer electronics.

Operating expenses are projecting to be about $265 million, excluding charges related to the floods, acquisition-related expenses and litigation.

The cost to restore operations and related expenses are expected to be in the range of $225 million to $275 million for the December quarter, not including insurance recovery.

The company expects to file a property damage claim of at least $50 million and an additional claim for business interruption during the December quarter.

It received some relief earlier this week when the Thai government announced it would waive import fees on some products to help companies operating in the country affected by widespread flooding and related damage.

In connection with its planned acquisition of San Jose-based Hitachi Global Storage Technologies Ltd., the company said it is working to satisfy provisions outlined in the European Commission’s recent conditional approval, which requires Western Digital to divest its business in 3.5-inch hard disk drives, including a production plant and related assets.

The $4.3 billion deal was set to make Western Digital the undisputed leader in drives but recent troubles have cast doubt on that likelihood.

The acquisition is expected to close by March, according to executives.

The company expects acquisition related charges in the December quarter of approximately $15 million.

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