Western Digital results top Street forecasts

SAN FRANCISCO, USA: Hard drive maker Western Digital Corp posted stronger-than-expected results on solid demand in its consumer business, and offered a forecast for the current quarter well above Wall Street's targets.

The report provided the latest evidence of improved spending on technology hardware, particularly on personal computers, which fell off drastically during the economic downturn.

But shares of the No. 2 hard drive maker dipped 1 percent in after-hours trade. Analysts said Western Digital's performance and forecast were just not as impressive as that turned in by its chief rival, Seagate Technology Inc, on Wednesday.

"It was a pretty solid beat, but maybe it wasn't quite as strong as Seagate's," said Hapoalim Securities USA analyst Kevin Hunt.

Seagate's results and strong outlook sent its shares up nearly 10 percent on Thursday.

Western Digital forecast earnings for the current quarter of $1.45 to $1.55 a share on revenue of $2.45 billion to $2.6 billion. That was far better than the average Wall Street estimate for earnings of $1.12 a share on revenue of $2.21 billion.

Chief Executive John Coyne said demand continued to be consumer driven, with some recovery in the commercial sector now visible.

He said an expected recovery in corporate spending and an upcoming PC refresh cycle "provide more more optimistic indicators than a year ago at this time."

The company also raised its fiscal 2010 capital expenditure forecast to between $650 million and $750 million

Analysts are widely expecting an uptick in technology spending in 2010. Research group Gartner predicts an overall 4.6 percent rise, after a 4.6 decline in 2009.

Western Digital posted net earnings of $429 million, or $1.85 a share, for its fiscal second quarter, ended Jan. 1, up from $14 million, or 6 cents a share, in the year-ago period.

Analysts were expecting Western Digital to earn $1.36 a share, according to Thomson Reuters I/B/E/S.

Revenue rose 43 percent to $2.62 billion, and hard drive shipments totaled 49.5 million units in the quarter.

Wall Street analysts, on average, were forecasting revenue of $2.35 billion.

Western Digital reported a gross margin of 26.2 percent, well above analysts' view of 23.4 percent.

Shares of Lake Forest, California-based Western Digital rose 2.3 percent to close at $45.29 on the New York Stock Exchange, and fell to $44.80 in extended trading.

The company's shares have risen more than three-fold from a year ago.