Western Digital Up on Mixed Earnings, Progress in ThailandMonday, January 23, 2012
Shares of Western Digital Corp. rose sharply in afterhours trading Monday after the Irvine-based disk drive maker announced “substantial progress” in restoring its Thailand operation.
Investors seemed to shrug off the company’s mixed financial results for the December quarter, and instead zeroed in on Chief Executive John Coyne’s assessment, sending shares up more than 5.5% in extended trading to a market value of about $8.1 billion.
The company beat Wall Street expectations on revenue and fell short of profit targets.
Western Digital said revenue in the December quarter hit $2 billion, down 20% from a year earlier.
Analysts on average had forecast revenue of $1.8 billion.
Adjusted profits were $145 million, down nearly 36% from a year ago.
Wall Street had expected $166 million.
The company shipped 28.5 million hard drive units in the December quarter, down from 52.2 million a year earlier, or 45%.
The total was higher than Western Digital’s October guidance of 22 million to 26 million shipped units.
The company’s disk drives go into computers, external storage devices, corporate networks and consumer electronics.
The company continues to ramp up production in Thailand and earlier this week resumed making sliders—a key component in disk drive production that had been suspended there since Oct. 10.
Coyne on Monday reiterated last week’s announcement that manufacturing in Thailand will be running at full capacity by September.
“While much work remains to be done over the next several quarters to reach our pre-flood manufacturing capabilities, the progress thus far is significantly ahead of our original expectations,” he said.
Industry watchers and competitors have keenly eyed the December quarter report from Western Digital to better gauge disk drive inventory and demand in the wake of the most severe floods to hit Thailand in decades.
Earlier this month Cupertino-based rival Seagate Technologies Inc. said it would ship about 47 million disk drives in the December quarter, ending Western Digital’s two year reign as the top disk driver maker in the world.
Seagate was not nearly as exposed in Thailand as Western Digital, which ships about 60% of its disk drives and employs some 37,000 people there.
Western Digital’s expenses related to flooding and damages in the December quarter were $199 million.
It also announced a $14 million charge in relation to its $4.3 billion planned acquisition of San Jose-based Hitachi Global Storage Technologies Ltd.
That deal is on track to be completed in March, executives said.
The move prompted Seagate in April to offer $1.4 billion for Samsung Electronics Co.’s disk drive business.