Technology

Return to Article

Western Digital Boosts Targets

Daniel Del'Re

SAN FRANCISCO -- Strong demand for hard disk drives led Western Digital WDC to ratchet up its first-quarter sales and profit targets, following a similar move by industry leader Seagate Technology STX.

After the markets closed Monday, Western Digital said it expects earnings of 61 cents to 65 cents a share for the quarter ending this month, excluding charges from its recent acquisition of Komag. That estimate towers above the storage-device maker's previous forecast of 43 cents to 47 cents, as well as analysts' consensus estimate of 51 cents.

Western Digital also said its gross margin should hit 17.5%, rebounding from lows in previous quarters and above its prior estimate of 15.5%. The change reflects firmer pricing power after years of price wars with Seagate and Asian rivals like Hitachi HIT.

Stronger sales of high-value disk drives should bring in $1.6 billion to $1.65 billion in revenue, Western Digital said. That exceeds the company's earlier forecast of $1.45 billion to $1.5 billion, and also tops analysts' average estimate of $1.49 billion.

"Improvements in demand, product mix and pricing thus far in the September quarter are the primary factors driving the improved outlook," the company said in a statement.

On Aug. 28, Seagate raised its first-quarter sales and profit targets and cited the same trends.

In after-hours trading, Western Digital shares were recently up 95 cents, or more than 4%, to $23.36.

Seagate shares rose modestly to $24.87.