Western Digital Shows a Profit Despite Slowdown

Faced with a seasonal slowdown and slumping sales of some older products, Western Digital Corp. on Thursday reported net income of $1.7 million for the first quarter, contrasted with a loss of $2.7 million for the same period a year ago.

Revenue for the quarter ended Sept. 29 was $255.8 million, up 14% from sales of $225.3 million a year earlier.

Roger W. Johnson, chairman and chief executive officer, said the company’s performance reflected a seasonal slowdown, a decline in demand for several older computer board products and delays in shipping the company’s new Caviar disk drive.

“We are managing our balance sheet very carefully and taking steps to reduce our expense levels in light of concerns regarding a softening economy and its potential impact on the computing markets,” Johnson said.

Western Digital’s stock closed at $5.875, up 62.5 cents Thursday in trading on the American Stock Exchange.

Robert J. Blair, spokesman for Western Digital, said the company’s main disk-drive business remains strong. However, he said sales were slow for the company’s older storage controller products, graphics board products in the resales market, and low-end chip-set business.

He said the company’s Caviar disk drives were delayed because of a “temporary quality problem” with an outside supplier. The company has resumed a normal shipping schedule and has a strong backlog for the Caviar drives.

The company, a maker of computer components, also confirmed that it laid off 200 employees, or a third of its work force, in Puerto Rico earlier in the month to adjust to shifting demand for its products.

Mark Matheson, analyst with Cruttenden & Co. in Newport Beach, said he had originally estimated the company’s earnings for the first quarter to be in the $7 million range. But he lowered the estimates after the company acknowledged its results would be lower than expected.

He said the prospects for the current quarter appear to be better because of the spate of new products that are entering volume production, including the Caviar drive, a set of systems-logic chips known as the 7600 series, and the 2.5-inch disk drives.

WESTERN DIGITAL EARNINGS

Hampered by a seasonal slowdown, slow sales of older products and a delay in shipping a new disk drive, Western Digital Corp. reported earnings of $1.7 million on revenue of $255.8 million, contrasted with a loss of $2.7 million on revenue of $225.3 million a year earlier.

(Dollars in thousands, except per-share data)

Percent 1990 1989 Change Total revenue $255,819 $225,282 13.6 Net earnings $1,654 ($2,690) NA Per share $.06 ($.09) NA

Source: Western Digital Corp.