Updated from 5:09 p.m. EDT
Driven by strong demand beyond the desktop PC, hard-drive maker
boosted its third-quarter profit by 48% and said sales in the normally weak fourth quarter will be better than expected.
Revenue grew by 23% to $920 million, and shipments increased by nearly 30% to 15.3 million, the Lake Forest, Calif., company said after the closing bell Thursday. Net income was $70.8 million, or 32 cents per share.
The numbers were not a major surprise -- the company earlier raised guidance for the quarter -- but were still a bit better than expected. Analysts polled by Thomson First Call had projected a profit of 31 cents per share on revenue of $910.2 million.
Western Digital said that 23% of its third-quarter business was derived from nondesktop PC sources including consumer electronics, enterprise applications, notebook PCs and retail sales. The remaining 77% came from hard drives for desktop computers. A year ago, only 14% of the company's revenue came from sources other than the desktop.
Western Digital isn't the only hard-drive maker pushing into the consumer electronics market.
which jumped in early, now derives 10% to 15% of its revenue from the consumer electronics market, a total that the Scotts Valley, Calif., company figures will jump to 25% or higher by 2007. (Seagate's numbers do not include notebook PCs.)
For now, Seagate is ahead of Western Digital because it produces a matchbox-size drive used in music players. But Western Digital said it would be shipping sample one-inch drives to customers in the current quarter and increasing production throughout the rest of the year.
Although June is the industry's slowest quarter, company Western Digital CEO Matt Massengill said consumer electronics will soften the seasonal hit to revenue and margins. He said the company expects revenue to range from $875 million to $900 million, with gross margins of 16.5% to 17%. Earnings per share will range from 22 cents to 24 cents.
Analysts were expecting a 22-cent profit on revenue of $870.08 million.
Western Digital shares ended the regular trading day with a gain of 47 cents, or 3.4%, to $12.90, but lost 24 cents after hours.