Western Digital’s Earnings Decline 30% in 3rd Quarter

IRVINE — Western Digital Corp. said Monday that its third-quarter earnings dropped 30% and blamed the decline on greater price competition in its main market and on a shortage of certain critical components.

The Irvine-based maker of computer disk drives and microcomputer products said it earned $19.7 million, or 40 cents a share, for the quarter ended April 1, down from $28.4 million, or 61 cents a share, a year earlier.

Revenue of $529 million was up nearly 26%, however, from $421 million.

Reacting to the earnings report, Western Digital’s common stock price fell $1.125 a share to close at $14.375 in trading on the New York Stock Exchange.

Chairman Chuck Haggerty said demand remained strong for the company’s products throughout the quarter, and Western Digital has high expectations for a line of disk drives especially designed to be used in the latest personal computers with the Pentium microchip.

The company works with computer manufacturers to have its products installed in new personal computers as original equipment.

Robert Schutte, analyst for the New York brokerage of Goldman, Sachs & Co., said that the components shortage has affected the most profitable high-end segment of Western Digital’s line of disk drives and that it, combined with competition, cut the company’s gross margin by 3.4% during the quarter.

But he said he expects conditions to improve in the fourth quarter. The components shortage “will ease a little bit,” he predicted.

For the first nine months of the fiscal year, Western Digital reported earnings of $96.9 million, or $1.95 a share, nearly triple the $35.8 million, or 88 cents a share, reported for the same period last year. Revenues were $1.5 billion, up 40% from $1.07 billion last year.

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Western Digital

Western Digital revenue for the third quarter, ended April 1, increased nearly 26% from the same period last year. Net income, however, declined by nearly one-third as did per-share revenue. Figures in millions of dollars, except per-share data:

3rd qtr 3rd qtr 9 months 9 months 1994 1995 1994 1995 Revenue $421.0 $529.3 $1,077 $1,546 Net income 28.4 19.7 35.8 97.0 Per share 0.61 0.40 0.88 1.95

Source: Western Digital; Researched by JANICE L. JONES / Los Angeles Times