Two technology stocks were hammered by investors Friday on concerns about poor outlooks for the current quarter and tougher industry conditions.
Shares of Western Digital Corp., the Lake Forest-based disk drive maker, were down more than 10% in midday New York trading on a recent market value of about $7 billion.
The stock fell a day after Western Digital reported June quarter results that beat analysts’ expectations.
The company saw $2 billion in revenue, up 43% from the same period a year earlier and just ahead of analysts’ expected $1.9 billion.
Including a $15 million charge for taxes related to licensing deals, the company posted profits of $213 million, up 5% from a year ago.
Without the charges, the company saw $198 million in profits, handily beating analysts’ expectation of roughly $182 million in profits.
Its stock began to falter in overnight trading on a more cautious outlook for the current quarter and continued to slide after an analyst downgrade this morning.
“We expect that the conditions created in the June quarter will have some residual impact on the industry and our business through the current quarter,” Chief Executive Jim Coyne said in a post-earnings conference call yesterday.
Needham & Co. analyst Richard Kugele downgraded the stock on Friday from “strong buy” to “buy.”
Some of the bearish view stems from the performance of Western Digital’s top rival, Scotts Valley-based Seagate Technology LLC.
Last week Seagate reported that it had cut prices on some of its drives, spurring concerns about slimmer profits industry-wide.
“We had incorrectly believed that Western Digital, while not immune, would be able to compensate for much of this (pricing) aggression in September,” Kugele said in a note to clients. “This was not to be, and an opportunity for a continuation of Western Digital’s tremendous run appears stalled.”
Irvine business software maker Epicor Software Corp. slumped Friday, a day after the company gave second-quarter results that missed expectations and lowered its outlook for the rest of the year.
Epicor’s shares were down 8% on a recent market value of about $397 million.
The company posted $128 million in revenue in the second quarter, up 21% from a year earlier.
Excluding roughly $11 million in costs related to stock compensation and write downs on assets, Epicor posted $10 million in profits, down 17% from the same period a year earlier.
Including the charges, the company reported $1.3 million in profits, down 80% from a year ago.
Epicor said it saw a slowing down in sales of cash register software to big clothing retailers and fewer licensing deals.
The company also is set to spend more than it originally anticipated ahead of the release of its newest software product suite, dubbed Epicor 9.
“While we thought we had factored in an appropriate level of caution for our second quarter earnings guidance,” Chief Executive Tom Kelly said in a statement. “We are prudently adjusting our second half outlook.”
For the current quarter, Epicor is looking for profits of $11 million to $13 million on sales of $135 million to $140 million.
The outlook falls short of analysts’ expected $15 million in profits on $140 million in revenue.
For the year, Epicor said it’s expecting profits of $45 million to $50 million on sales of $525 million to $535 million.
Analysts were looking for 2008 profits of $53 million on sales of $536 million.
