Shares of Western Digital rose nearly 10% a day after the Lake Forest-based disk drive maker reported earnings that Wall Street favored.
The results were positive amid its recent $1 billion acquisition of thin film disk maker Komag Inc., according to one analyst.
The integration of Komag “appears to be progressing much smoother than consensus,” analyst Shaw Wu of American Technology Research said in a note.
“Going forward, we view Western Digital as a more formidable competitor with vertical integration similar to (rival Seagate Technology) and to a lesser extent (Hitachi’s hard drive disk business,” Wu said.
Western Digital posted a 39% increase in sales to nearly $1.8 billion. It booked $1.726 billion of sales from its core business,hard drives. The other $40 million came from media operations it acquired from Komag.
Excluding charges, the company’s profit rose 77% to $182 million, versus a year earlier.
Including charges, net income fell 33% to $69 million. The company booked one-time charges related to taxes and its acquisition of Komag.
Wall Street shook off the charges, pleased that the earnings showed a solid demand from computer makes such as Hewlett-Packard Co., Dell Inc. and Apple Inc.
Meanwhile, Western Digital upped its forecast for the December quarter. It expects to post a profit of $159 million to $168 million. It expects sales of $1.92 billion.
Aaron Rakers, an analyst with Wachovia Corp., noted that Western Digital had a “very positive tone” on demand in the December quarter and early next year. He still held his rating as “market perform” on the company.
The company counts market value of about $6.2 billion.
