Western Digital

(WDC) - Get Report

on Monday provided a mixed batch of second-quarter news, telling investors to expect slightly higher -than-expected revenue, but warning that gross margins will fall below the company's target.

The news pushed shares of the hard-drive maker south; in recent trading Western Digital was off $1.16, or 10.1%, to $10.27.

The company said in a regulatory filing that revenue in the December quarter will range from $790 million to $810 million, exceeding its previous guidance of $760 million to $780 million. Earnings per share are expected to be in line with previous guidance of 28 cents to 30 cents, but gross margins will fall below the company's target of 18%. The company did not say how far margins are expected to fall.

Analysts polled by Thomson First Call are expecting Western Digital to make a profit of 29 cents on sales of $771.26 million in the second fiscal quarter of 2004, ending Dec. 31.

Western Digital blamed the drop in margins on slower-than-expected sales and lower prices in the distribution channel.