Western Digital Boosts Targets
SAN FRANCISCO -- Strong demand for hard disk drives led
Western Digital
(WDC) - Get Report
to ratchet up its first-quarter sales and profit targets, following a similar move by industry leader
Seagate Technology
(STX) - Get Report
.
After the markets closed Monday, Western Digital said it expects earnings of 61 cents to 65 cents a share for the quarter ending this month, excluding charges from its recent acquisition of
Komag
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. That estimate towers above the storage-device maker's previous forecast of 43 cents to 47 cents, as well as analysts' consensus estimate of 51 cents.
Western Digital also said its gross margin should hit 17.5%, rebounding from lows in previous quarters and above its prior estimate of 15.5%. The change reflects firmer pricing power after years of price wars with Seagate and Asian rivals like
Hitachi
(HIT)
.
Stronger sales of high-value disk drives should bring in $1.6 billion to $1.65 billion in revenue, Western Digital said. That exceeds the company's earlier forecast of $1.45 billion to $1.5 billion, and also tops analysts' average estimate of $1.49 billion.
"Improvements in demand, product mix and pricing thus far in the September quarter are the primary factors driving the improved outlook," the company said in a statement.
On Aug. 28, Seagate raised its first-quarter sales and profit targets and cited the same trends.
In after-hours trading, Western Digital shares were recently up 95 cents, or more than 4%, to $23.36.
Seagate shares rose modestly to $24.87.
