Western Digital Corp. (WDC) reported better-than-expected third-quarter results and said it will be able to meet customer demand for its hard-disk drives in the current period and following quarters.
Western Digital, which makes about 60 percent of its hard-disk drives in Thailand, has been working to recover from severe flooding in the region. The company and others in the tech industry had suspended operations there due to damaged facilities, but Western Digital has been bringing more production back online.
Chief Executive John Coyne on Thursday said the “recovery activities related to both WD operations and those of our supply chain partners impacted by the Thailand floods have reached a point where we now have the capability to adequately meet anticipated customer demand in the current quarter and beyond.”
He also noted the third-quarter earnings and revenue-better than the company and analysts expected-shows the “potential” of Western Digital after its acquisition of Hitachi Ltd’s (HIT, 6501.TO) hard-disk drive operations. The $3.4 billion deal closed in early March, contributing about three weeks of results to Western Digital’s numbers.
Shares, up 42 percent in 2012 through Thursday’s close, rose another 2.5 percent to $45.20 in after-hours trading before recently falling to $43.60, down 1 percent from the Thursday close.
Many tech companies-including Western Digital and component supplier Hutchinson Technology Inc. (HTCH)-struggled as rising water flooded their facilities in Thailand. The issues in the country, the world’s second-largest exporter of hard-disk drives, came during the key selling season for hard-disk drives, with PC makers obtaining supplies for holiday sales.
While Western Digital was hurt by the flooding, the Thai facilities of rival Seagate Technology Inc. (STX) were unharmed, giving it an advantage. Seagate also has benefited from higher pricing and longer-term contracts with customers and last week reported a 65 percent increase in revenue and a surge in earnings in the March quarter.
Analysts largely expected Western Digital’s quarterly results to reflect a speedier recovery. J.P. Morgan analyst Mark Moskowitz earlier Thursday noted his research indicated Western Digital’s supply capacity was recovering ahead of plan.
Western Digital said it shipped 44.2 million drives in the period ended March 30, down from 49.8 million a year ago. The figure is much better than the 28.5 million shipped in the fiscal second quarter and Western Digital’s estimate for 31 million to 33 million.
For the quarter ended March 30, Western Digital reported a profit of $483 million, or $1.96 a share, from $146 million, or 62 cents a share, a year earlier.
Excluding charges and expenses related to the Thailand flooding and year-earlier expenses related to its acquisition of Hitachi Ltd’s (HIT, 6501.TO) hard-disk-drive business, earnings rose to $2.52 from 66 cents. Revenue grew 35 percent to $3.04 billion.
In January, the company forecast earnings, excluding flooding and acquisitions costs, of $1.15 to $1.45 a share on revenue of $2 billion to $2.15 billion.
Analysts were expecting results stronger than Western Digital’s estimates, recently projecting earnings of $1.59 a share on revenue of $2.46 billion.
Gross margin widened to 32.2 percent from 18.2 percent. -By Shara Tibken