Western Digital Unveils 21 New Products
Western Digital, taking a big step toward becoming a major supplier of components based on IBM’s latest line of personal computers, announced 21 new products Monday in its biggest one-day product blitz ever.
The Irvine-based technology company introduced an array of components designed for computer makers intending to produce so-called clones of IBM’s Personal System/2 computers. The PS/2 line was announced by IBM in April.
The new Western Digital products include circuit boards, chips and other components used to control basic PS/2 functions such as data storage, graphics and communications.
“We see significant opportunities growing out of the PS/2 products for Western Digital, said the company’s chairman, Roger W. Johnson. “We feel that Western Digital remains in a strong position to respond to the core logic, storage, communications and video needs of our entire expanding customer base.”
John M. Geraghty, an analyst for First Boston, a New York securities firm, said Western Digital probably now offers a broader range of PS/2 components than any other component maker. “It gives them the distinction of being a one-stop shopping company” for PS/2 clone manufacturers, he said.
Investors reacted enthusiastically to the announcement. Western Digital stock jumped $1.125 to close at $26.50 per share Monday. It was the third-most-active issue on the American Stock Exchange, with nearly 500,000 shares changing hands.
Western Digital has been a supplier of components to IBM for its existing AT and XT-model personal computers, as well as to manufacturers of AT and XT clones and compatibles. Sales to IBM accounted for about 20% of Western Digital’s revenues of $462 million for the year ended June 30. IBM’s new PS/2 computers--unlike their predecessors--will not use Western Digital components.
Johnson said that in the short term, Western Digital’s sales of AT and XT products have been “unaffected” by the unveiling of the PS/2 line. “Our customers did not hold off or cancel purchases in the wake of the PS/2 product introductions,” he said.
However, Bert Moyer, Western Digital’s vice president of finance, said the firm is “hedging (its) bets” by offering PS/2 products as well as components used in the older IBM computers. IBM’s PS/2 line is widely expected to set a new standard in the personal computer industry, eventually making earlier systems obsolete.
Western Digital estimates that PS/2 products will account for “perhaps 20%” of sales during the current year, Moyer said. That percentage “will grow as we proceed through the years.”
First Boston’s Geraghty said Western Digital “recognizes the business is moving into new standards and they’re moving with the standards.” He said the product announcement is “psychologically important” because it will alleviate concerns that Western Digital would not be able to make products compatible with the PS/2 machines.
