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Higher Outlook Lifts Western Digital

The company's shares gain 20% a day after it raises its first-quarter guidance.
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Shares of

Western Digital

(WDC) - Get Report

were sharply higher Thursday, a day after the maker of computer disk drives raised its guidance for the fiscal first quarter and said the acquisition of

Read-Rite

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should increase its earnings sooner than had been expected.

Revenue and unit volumes are "tracking toward the high end" of their previous estimates, the company said. Western Digital now expects first-quarter revenue of $690 million to $700 million, with volume of 11 million to 11.3 million units.

The company said it should roughly break even in the quarter, including charges of up to $50 million related to acquired in-process research and development costs, employee severance costs, start-up expenses and other items.

Western's shares were gaining $1.92, or 20%, to $11.42.

In July, Western projected first-quarter revenue of $680 million to $700 million on unit shipments of between 10.7 million and 11.2 million, and earnings of 22 cents to 24 cents a share.

The company now believes the acquisition of Read-Rite will add to earnings in the quarter ending in December -- nine months earlier than previously expected. Western said the total cost of the acquisition will reach $170 million to $180 million.