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IRVINE, Calif. (


) - Shares of

Western Digital


have surged after the hard-drive maker delivered an upbeat December quarter outlook late on Thursday.

Western Digital's stock rose $3.70, or 12.65%, to $32.95 in Friday trading after the company predicted revenue of at least $1.8 billion and gross margins between 18% and 23%, above the high end of its business model. The company had previously predicted fiscal second-quarter revenue between $1.05 billion and $1.25 billion.

Western Digital has updated its December quarter outlook.

The component maker also updated investors on its recovery efforts following the recent

devastating floods

in Thailand. Western Digital explained that it restarted production of hard drives this week in one of its buildings in Bang Pa-In, Thailand, a week ahead of schedule.

"Much work remains to be done, but we couldn't be more pleased with the effort and results thus far, including tremendous support from our supply partners and customers," explained John Coyne, the Western Digital CEO, in a statement. "The passion, perseverance, ingenuity and execution exhibited by the Western Digital team has been extraordinary and enabled us to make substantial progress in partially restoring our operations in Thailand."

Western Digital expects to restart production of hard drive head sliders at Bang Pa-In in the March 2012 quarter, and also begin production in a new slider location in Penang, Malaysia, around the same time.

The firm's other hard drive facilities in Thailand, at Navanakorn, however, are still under approximately 2 feet of water, it explained, although the site is expected to be pumped dry within 10 days.

Western Digital's charges related to the floods are expected to be between $225 million and $275 million in the December quarter, excluding any insurance payments.

The drive maker also said that it will be "vigorously contesting" a recent arbitration award of $525 million against Western Digital. The decision followed claims brought by rival



against Western Digital and a former Seagate employee alleging misappropriation of confidential information and trade secrets.

Shares of Seagate slumped 65 cents, or 3.74%, to $16.75 on Friday.

-- Written by James Rogers in New York

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