The company's gross margin improved 1.1 percentage points to 18.3% from the same quarter a year ago thanks to better pricing, cost controls and a shift in sales toward higher-priced drives. This level of profitability falls within the company's long-term target range of 15% to 20%.
Average hard drive selling prices were approximately $59 per unit, an increase of $3 from the same quarter last year and $4 from the previous quarter.
Coyne said the factors affecting pricing and demand should remain in tact in the foreseeable future. Inventories of 3.5-inch and 2.5-inch drives are 11% lower compared to this time last year, he said.
Coyne also noted that large Japanese competitors, namely
, appear to be focusing on improving profitability, rather than churning out drives to gain market share, which undercuts prices industry-wide.
Western Digital expects its average selling price to remain at their current level in the seasonally weak December quarter. The company forecasted second-quarter earnings of 73 cents to 77 cents a share, excluding one-time items, on revenue of $1.875 billion and $1.925 billion. These estimates exceed analysts' consensus earnings forecast of 57 cents a share on revenue of $1.77 billion.
In late trading, shares had recently surged 79 cents, over 3%, to $26.81.