Western Digital Quarterly Earnings Dip 24%; General Automation Projects Loss

Orange County’s largest technology company, Western Digital, reported sharply lower earnings Thursday for its latest quarter, while computer manufacturer General Automation projected a loss for the same 3-month period.

Irvine-based Western Digital said net income for its fiscal 1988 second quarter, which ended Dec. 31, declined 24% to $8.3 million from $11 million in the same period a year earlier. It was the company’s first quarterly earnings decline in more than two years.

The company continued its rapid sales growth, however, reporting a 40% rise in revenue to $160.7 million for the second quarter.

Despite the earnings decline, Western Digital stock closed Thursday at $12.25, up 25 cents, in American Stock Exchange trading.

A major manufacturer of computer-related products, Western Digital attributed its lower earnings to higher research and development spending, strong demand for products with relatively low profit margins and the costs of entering several new markets.

Bigger Market Share

“Our deliberate strategy of aggressive market entry and heavy investment in product development is designed to increase our market shares and lower manufacturing costs,” said Western Digital Chairman Roger W. Johnson.

For the six months ended Dec. 31, Western Digital reported record net income of $20.5 million, up nearly 10% from the year-earlier period. Six-month sales climbed 44% to $300.8 million.

Meanwhile, in a preliminary earnings release, Anaheim-based General Automation said it expects to report a loss for the quarter ended Dec. 31. The company gave no indication of how large the loss will be.

General Automation officials were unavailable for comment Thursday.

The computer maker said revenue for its fiscal 1988 second quarter will be $1 million less than the company’s target of $14 million. Even so, sales are expected to be up 40% over a year ago, the company said.

In the prepared release, General Automation Chairman Leonard N. MacKenzie attributed the expected loss to higher costs associated with the firm’s acquisition of two technology companies, Parallel and Aston, and other expansion costs.

The company also said its sales in Australia and the United Kingdom fell below expections.

General Automation stock closed Friday at $1.75 per share, up 12.5 cents, on the American Stock Exchange.