Western Digital Profit Slides 43% in Latest Quarter
January 28 2016 - 6:10PM
Dow Jones News
Western Digital Corp. on Thursday said its profit slid 43% in
its second quarter, making it the latest company in the sector to
grapple with soft results.
The biggest maker of computer disk drives said its revenue
declined 15%, but met its expectations, along with its adjusted
earnings.
Chief Executive Steve Milligan said the company contended with a
lower-than-expected available market for hard drives during the
three-month period.
Shares of the company slid 1.5%, to $45.00, after hours.
As part of a sector consolidation trend in response to slower
growth, rising competition and technology shifts, the Irvine,
Calif., company in October unveiled a $19 billion deal for chip
maker SanDisk Corp., a key supplier of memory devices for
smartphones.
The deal for SanDisk—which had been moving into Western
Digital's traditional business of supplying computer makers—was
slated to make the disk-drive maker the broadest supplier of
data-storage components and likely fuel new pricing pressure in the
storage market.
For Western Digital, which had edged past Seagate Technology PLC
to take the top spot among disk-drive makers, the sector's shift in
technology was a significant driver as newer sever and disk-storage
systems move to chip-based flash-storage technology.
Overall for the quarter ended Jan. 1, Western Digital reported a
profit of $251 million, or $1.07 a share, down from $438 million,
or $1.84 a share, a year earlier. Excluding one-time items,
per-share earnings fell to $1.60 from $2.26.
Revenue decreased 15%, to $3.32 billion.
The company had expected revenue between $3.3 billion and $3.4
billion with adjusted earnings between $1.50 and $1.60 on a
per-share basis. Analysts polled by Thomson Reuters expected
per-share profit of $1.54 and revenue of $3.34 billion.
In its last reported quarter in October, Seagate reported that
revenue tumbled 23%, with profit falling 91%. The company is slated
to report its fiscal second quarter Friday, Jan. 29.
Western Digital, meanwhile, expects $500 million in cost savings
from the combined operations after the SanDisk deal is closed,
which is expected between April and June. Some analysts, however,
are concerned however that Western Digital is too dependent on the
personal-computer industry, which has faced stiff challenges from
mobile devices and tablets.
Sales of personal computers fell in the final quarter of 2015 to
their lowest level since 2007, the year Apple Inc. introduced the
iPhone, according to International Data Corp.
SanDisk Corp. on Wednesday said profit slid in its latest
quarter as the company sustained merger-related charges. The
Milpitas, Calif.-based company recorded a $28.1 million charge as
sales slid 11%.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
January 28, 2016 17:55 ET (22:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Sandisk (NASDAQ:SNDK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Sandisk (NASDAQ:SNDK)
Historical Stock Chart
From Apr 2023 to Apr 2024