Shares of Komag ( KOMG) were taking a beating Thursday as concerns over margins, currency fluctuations and guidance overshadowed the storage-media maker's otherwise strong fourth quarter.

In recent trading, shares were off $1.87, or 5.1%, to $34.42.

Net income in the quarter was up 32% to $40.4 million, or $1.39 a share, the company reported Wednesday evening. Revenue was up 32.7% over the previous year to $255.9 million, a company record.

Margins, though, slipped to 24.1%, down 160 basis points sequentially.

Komag manufacturers thin-film disks, a key component of hard drives. Its factories are in Malaysia, and the company said strength in the local currency, the ringgit, raised costs and hurt margins. Higher costs for ruthenium, a precious metal deposited on the surface of the disks, also hurt profitability.

Mark Miller, the veteran storage analyst for Brean Murray Carret, said Komag reported high factory utilization and good product mix, generally signs that accompany better, or at least stable, margins. It's possible that pricing pressure from customers, including Hitachi Global Storage Technologies and Seagate Technology ( STX) hurt profitability.

Komag expects revenue in the first quarter to increase by about 20% over last year to $231.5 million. Although Komag did not give explicit guidance for first-quarter EPS, Miller said that given the range of margins, Wall Street is assuming an earnings range of 85 cents a share to $1.05 a share, well below First Call's consensus of $1.11 on sales of $245 million.

Miller, whose company does not have an investment banking relationship with Komag, retained his buy rating (while lowering first-half estimates), saying he expects margins to improve in the second half of the year. He cited better factory utilization, improved yields for perpendicular media, rising prices and reduced material costs in the future.

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