Western Digital Beats Expectations, Tops RivalThursday, July 21, 2011
Irvine-based disk drive maker Western Digital Corp. on Thursday reported revenue and profits in the June quarter that beat Wall Street expectations.
Western Digital shares were flat in afterhours trading to a market value of about $8.1 billion, quieting losses that topped 7% earlier in the day on news that rival Scotts Valley-based Seagate Technologies LLC trimmed its sales and earnings outlook amid margin concerns for the current quarter.
Western Digital reported revenue in the June quarter of $2.4 billion, up less than 1% from a year earlier.
Analysts on average were expecting revenue of $2.26 billion.
Adjusted profits topped $158 million, down 40% from a year ago as the company saw increased spending on research and development and slimmer margins.
Analysts were expecting a profit of $151 million.
The company said it shipped 54 million drives in the June quarter, up 8% from a year ago.
Investors weighed the quarterly results for Western Digital favorably compared to chief rival Seagate.
Western Digital was able to meet stronger than anticipated demand driven by increased sea freight in advance of the second half of the year and supply concerns in the wake of the Japan earthquake, according to Western Digital President and Chief Executive John Coyne.
Investors may have also taken note of the advances made on Western Digital’s pending acquisition of Hitachi Global Storage Technologies, announced in early March.
The $4.3 billion deal, expected to close in the fourth 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, which sells more corporate drives.
“We are continuing to engage in the approval process with all the appropriate regulatory agencies and thus far we have received clearance from Brazil, Taiwan and Turkey,” Coyne said.
Western Digital reported $35 million in expenses associated with the planned acquisition and for unrelated legal matters.
For the current quarter, analysts are expecting Western Digital to post adjusted profits of $206 million on sales of $2.4 billion.
The company did not release any guidance on the current quarter.
Seagate projected a 69% drop in earnings for current quarter, to a range of 29 cents to 33 cents a share.
Analysts had been expecting 44 cents a share.
Seagate’s shares were down as much as 17% in midday New York trading today and flat in afterhours trading.
Thursday’s losses erased a 13% gain this year.