NEW YORK (TheStreet) -- Shares of Western Digital (WDC) - Get Report are plunging 12.09% to $47.21 on heavy volume in mid-afternoon trading on Friday as a result of lower than expected profit guidance, even though the company reported better than expected fiscal 2016 fourth quarter results on Thursday.
So far today, 12.28 million shares have traded hands vs. the average trading volume of 5.35 million shares.
During the company's conference call on Thursday after the market close, Western Digital said that it expects profit for the current quarter to be between 85 cents and 90 cents per share, below analysts' estimates of 98 cents.
CEO Steve Milligan said the lower profit outlook is related to concerns over increasing expenses after acquiring flash-memory maker SanDisk in late 2015.
In all, the company reported adjusted earnings of 79 cents per share on revenues of $3.5 billion for the fourth quarter, beating analysts' estimates of 71 cents on revenues of $3.45 billion.
While SanDisk drove Western Digital's total sales up 9.5% during the fourth quarter, it also drove operating expenses up by 48%, thus offsetting the sales benefit.
The Irvine, CA-based company is a hard drive and flash memory chip maker.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate WESTERN DIGITAL CORP as a Hold with a ratings score of C-. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.
You can view the full analysis from the report here: WDC