Western Digital Profit Slides 43% in Latest Quarter

Western Digital Corp. on Thursday said its profit slid 43% in its second quarter, making it the latest company in the sector to grapple with soft results.

The biggest maker of computer disk drives said its revenue declined 15%, but met its expectations, along with its adjusted earnings.

Chief Executive Steve Milligan said the company contended with a lower-than-expected available market for hard drives during the three-month period.

Shares of the company slid 1.5%, to $45.00, after hours.

As part of a sector consolidation trend in response to slower growth, rising competition and technology shifts, the Irvine, Calif., company in October unveiled a $19 billion deal for chip maker SanDisk Corp., a key supplier of memory devices for smartphones.

The deal for SanDisk—which had been moving into Western Digital's traditional business of supplying computer makers—was slated to make the disk-drive maker the broadest supplier of data-storage components and likely fuel new pricing pressure in the storage market.

For Western Digital, which had edged past Seagate Technology PLC to take the top spot among disk-drive makers, the sector's shift in technology was a significant driver as newer sever and disk-storage systems move to chip-based flash-storage technology.

Overall for the quarter ended Jan. 1, Western Digital reported a profit of $251 million, or $1.07 a share, down from $438 million, or $1.84 a share, a year earlier. Excluding one-time items, per-share earnings fell to $1.60 from $2.26.

Revenue decreased 15%, to $3.32 billion.

The company had expected revenue between $3.3 billion and $3.4 billion with adjusted earnings between $1.50 and $1.60 on a per-share basis. Analysts polled by Thomson Reuters expected per-share profit of $1.54 and revenue of $3.34 billion.

In its last reported quarter in October, Seagate reported that revenue tumbled 23%, with profit falling 91%. The company is slated to report its fiscal second quarter Friday, Jan. 29.

Western Digital, meanwhile, expects $500 million in cost savings from the combined operations after the SanDisk deal is closed, which is expected between April and June. Some analysts, however, are concerned however that Western Digital is too dependent on the personal-computer industry, which has faced stiff challenges from mobile devices and tablets.

Sales of personal computers fell in the final quarter of 2015 to their lowest level since 2007, the year Apple Inc. introduced the iPhone, according to International Data Corp.

SanDisk Corp. on Wednesday said profit slid in its latest quarter as the company sustained merger-related charges. The Milpitas, Calif.-based company recorded a $28.1 million charge as sales slid 11%.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

January 28, 2016 17:55 ET (22:55 GMT)

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