O.C.’s Western Digital Stock Soars, Armor All Plunges

The stocks of two Orange County firms drew attention on Wall Street on Wednesday, Western Digital Corp. gaining 5.7% and Armor All Corp. losing 15.7%.

Western Digital’s stock, the third most heavily traded on the American Stock Exchange, climbed 62.5 cents to $11.50. The move was an apparent reaction to an analyst’s buy recommendation based on speculation the firm had landed a lucrative contract with International Business Machines.

Kidder Peabody analyst Richard L. Whittington upgraded his recommendation on Western Digital, a maker of computer chips and other personal computer components. Whittington reportedly said Irvine-based Western Digital won a contract to provide parts for a new IBM laptop personal computer due for introduction in about six weeks.

Whittington, who could not be reached for comment, reportedly predicted that the deal will raise Western Digital’s earnings estimates for the fiscal year ending in June to 70 cents a share, up from 50 cents, and to $1 a share by 1991.

Western Digital spokesman Bob Blair said he could not comment on the reports about the contract with IBM. “We don’t comment on reports of specific customer relationships,” he said. IBM also declined comment.

Blair said the company’s stock was being heavily traded in light of the analyst’s recommendations. He said Whittington has been “very bearish on our company and the industry” in the past.

Meanwhile, the stock of Armor All Corp. dropped $2.75 to $15.50. The dip came a day after the company announced a management shake-up and said its fourth quarter earnings will be lower than expected.

Armor All, which is based in Aliso Viejo and is a subsidiary of McKesson Corp., said in a statement that earnings for the fourth quarter, ending March 31, will be “down substantially” from the year-earlier period.

The company also announced that Jeffrey M. Sherman has resigned as president, chief executive and a director. Kenneth C. Hicken, Armor All’s chairman, will assume the additional titles of president and chief executive, the company said.

Hicken attributed the anticipated decline in earnings to “continuing softness in sales of the company’s products and higher marketing expenses.” Armor All is a leading automotive-care products supplier.