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 Hitachi (HIT), 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.