Architect of Western Digital Refinancing Resigns Position

Western Digital Corp. said Wednesday that George Bragg has resigned as vice chairman but will remain as a member of the company’s board of directors.

Bragg, 60, joined the Western Digital board in December, 1990, and became vice chairman in August, 1991. He performed various strategic management tasks during that time, the company said.

Roger W. Johnson, chief executive of the computer components maker, said then that he brought Bragg aboard to help reorganize Western Digital’s management and put its financial house in order. The two were former colleagues, both having worked at the disk drive division of Memorex in the 1970s.

In a statement, Johnson said: “George Bragg made an outstanding contribution to the successful refinancing of the company during one of the most challenging chapters in our 23-year history.”

Bragg could not be reached for comment.

James Stone, analyst at broker-dealer Pennsylvania Merchant in Radnor, Pa., said of Bragg: “He was brought in to strengthen management when the company was very weak.”

During the past year, Western Digital completed the first stage of a recovery. It renegotiated the terms of its bank debt and raised money in a public stock offering. And after a string of quarterly losses that pushed it to the edge of bankruptcy, the company has now reported three consecutive quarters of profit. It has also added Charles Haggerty, a former IBM executive, as president and chief operating officer.

Stone said Western Digital’s biggest comeback has been in launching new generations of disk drives that are six to nine months ahead of competitors’. He said he is not concerned about the company’s financial outlook.

For its latest fiscal quarter, the company reported earnings of $6.9 million, or 22 cents a share, contrasted with a loss of $20.4 million for the same period a year earlier. Three-month revenue rose to $343.5 million from $216.3 million.

Another analyst, however, thinks that the company’s future is still somewhat cloudy. Ian Gilson at L.H. Friend, Weinress & Frankson, an investment bank in Irvine, said a temporary shortage of disk drives has now subsided. That means prices are beginning to fall at a faster pace, and that could hurt manufacturers’ profits.

Also, Western Digital traded lawsuits earlier this week with Conner Peripherals Inc. in San Jose. Each company alleges that the other is infringing on its proprietary disk drive technology.

“Western Digital has come a long way, but their profitability is still at the low end of the industry,” Gilson said. “I would hardly say their financial house is in order.”