WD Shares Up on Fee Waiver for Thai OperationsTuesday, November 29, 2011
Shares of Irvine-based disk drive maker Western Digital Corp. rose Tuesday after the Thai government said it would waive import fees on some products to help companies in the region affected by widespread flooding and related damage.
Investors sent Western Digital shares up 4.4% in early afternoon New York trading to a market value of about $6.5 billion on word of the assistance.
The measure was announced Tuesday by Thailand Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong. It includes waving import duties for some machinery, spare parts and finished goods through next June.
Western Digital was forced to close its production plants in Thailand, and will likely lose its title as the world’s largest disk drive maker this quarter.
Its flooded buildings in Thailand house assembly and testing operations along with a “substantial majority” of the company’s slider fabrication operations, which account for a key component in disk drives, Chief Operating Officer Tim Leyden said in the recent conference call.
Western Digital is working to shift some of those operations to its facility in Malaysia.
Its recent guidance on the current quarter shed some light on a grim situation in Thailand, which is struggling with flooding caused by a heavier-than-usual monsoon season punctuated by typhoons.
Executives said Western Digital expects to ship between 22 million and 26 million hard drives in the December quarter, down nearly 59% from the prior period.
The company has held the market share lead over Scotts Valley-based rival Seagate Technologies LLC for nearly two years. It could slip to No. 3 or No. 4 worldwide, according to El Segundo-based market tracker iSuppli Corp., a unit of IHS Inc.
Thailand is the world’s second-largest producer of disk drives behind China and a major supplier of hard drive components.
Western Digital ships about 60% of its disk drives from Thailand, where it employs some 37,000 people.