Stock Dips to Year’s Low at Irvine’s Western Digital : Computer products: A closing price of $5.625 per share is linked to rumors and sluggish sales of some key products.

Sluggish sales of some key products and industry rumors have combined to drive down Western Digital Corp.’s stock to its lowest closing price in the past year.

Robert J. Blair, a Western Digital spokesman, confirmed Tuesday that sales of the company’s computer disk drives and several other products have been slower than anticipated. As a result, he said, the company’s earnings for the first quarter that ends Sept. 30 will be below most Wall Street estimates.

Western Digital stock closed Tuesday at $5.625 per share, down 50 cents on the American Stock Exchange. The stock has been as high as $14.750 during the past year.

“Secondary technology stocks have been unmercilessly punished in this current market when there is an expected earnings shortfall,” said Vincent L. Turzo, an analyst with Prescott, Ball & Turben, a Cleveland securities firm.

Turzo had been estimating earnings of $7.3 million for the first quarter. But he now doubts that Western Digital will reach that mark. The company expects to release its first-quarter results Oct. 18.

Two other developments are helping to sour Wall Street on the Irvine-based computer products company, said Richard L. Whittington, an analyst at Kidder Peabody & Co. in New York.

International Business Machines Corp. will probably delay production of its laptop computer until next year, according to industry analysts and a report Tuesday in the Wall Street Journal. Whittington and other analysts have said previously that Western Digital had won a large contract to supply parts for IBM’s laptop.

Western Digital officials have refused to comment since speculation about a big IBM contract began this summer, sending the firm’s stock soaring. Western Digital Chairman Roger Johnson did say in July that the company was negotiating a manufacturing agreement with IBM.

Meanwhile, Intel Corp. is expected Wednesday to unveil details about a much-anticipated set of computer microchips for laptop and notebook computers. The Intel chips are expected to compete with chips produced by Western Digital.

Industry analysts said Intel is expected to announce two chips that will combine the functions of Intel’s 80386SX microprocessor--a powerful chip that is the brains of many personal computers--with three to five peripheral chips in a single package.

The space-saving chips would enable computer makers to build smaller, more powerful and energy-efficient machines for the fast-growing laptop and notebook computer markets, analysts said.

Intel has a technological monopoly on the high-performance microprocessor market, but Western Digital and two dozen other companies make chips that control how the microprocessor communicates with such peripheral devices as printers.

By linking the microprocessor with the peripheral logic chips, Intel could take sales away from Western Digital, said Michael Slater, editor of the Microprocessor Report in Sebastopol. Logic chips made up about 6%--or about $66 million--of Western Digital’s sales for its fiscal year ended June 30.

Western Digital’s Blair declined to comment on the expected Intel announcement. But he said Intel’s new chip design--as described in various news reports--would not necessarily make Western Digital’s chip design approach obsolete.

“The product direction of coupling the microprocessor with other functions is an avenue that may represent future opportunities for Western Digital’s interarchitecture approach,” he said. “We are already looking into ways we can participate without getting into making microprocessors. We think the two approaches can coexist.”

Under its “interarchitecture” approach, Western Digital seeks to boost computers’ performance by designing different peripheral logic chips to work better together than if they were built by different companies. The company’s first chips designed by this approach are entering initial production.

With those chips, Western Digital has targeted the laptop market as one as its high-growth markets.

Lawrence Borgman, an analyst with Dillon Read & Co. in New York, said he expected Western Digital’s logic chip sales to double in the current fiscal year, regardless of the Intel announcement. He said the Intel chip set will put competitive pressure on Western Digital.

The price of Western Digital stock has fallen steadily over the past three months, reaching a 52-week low closing price of $5.625 on Tuesday.