Western Digital Shares Surge While AST's Take Plunge : Technology: The stock market reacts sharply to revisions in the two O.C. computer manufacturers' quarterly earnings estimates.

Western Digital Shares Surge While AST’s Take Plunge : Technology: The stock market reacts sharply to revisions in the two O.C. computer manufacturers’ quarterly earnings estimates.

By SUSAN CHRISTIAN

March 3, 1994 12 AM PT

TIMES STAFF WRITER

IRVINE —

Stock prices for two of Orange County’s biggest computer makers moved dramatically Wednesday--though in opposite directions--after the companies revised their quarterly earnings estimates.

AST Research Inc.’s stock plummeted $5.25 a share to close at $23.50 in heavy Nasdaq trading after the personal computer maker said that earnings will fall short of earlier projections. In contrast, Western Digital Corp.’s stock shot up $2.25 to close at $18 on the New York Stock Exchange after the company announced that its results will be better than expected.

For AST, the tumble totaled $8 in a two-day period. The company’s stock fell $2.75 Tuesday amid rumors that AST will cut its computer prices.

Bruce Edwards, AST’s chief financial officer, told analysts in a conference call Wednesday morning that sales to North American distributors and resellers have dropped, bringing down revenue and profit.

“He told us that AST’s sales growth (from a year ago) is going to be only 60% instead of 70%,” said John Coyle of Standard & Poor’s Corp. “That’s still a nice growth rate, but the pared-down revenue obviously will have an impact on earnings.”

Previously, analysts had estimated that AST would report earnings of $15.2 million, or 48 cents a share, for its third fiscal quarter, which ends March 31. That would compare to profit of $11 million, or 35 cents a share, for the same period a year earlier.

Coyle said AST’s new problems prompted him to revise his third-quarter earnings forecast to about $13 million, or 39 cents a share.

Jerry Devlin, AST’s vice president of sales for the Americas, said that “a number of factors” brought revenue down, including pricing pressures in the industry and the Northeast’s cold front.

“We had such a tremendous quarter last quarter that it simply set expectations too high,” Devlin said. “We wanted to set the right expectations so that when we get to the end of the quarter people won’t find we gave them information not in line with what we finally report.”

While AST’s stock took a hit, Western Digital’s enjoyed a surge in price.

Charles A. Haggerty, chairman, president and chief executive officer of Western Digital, announced in a press release that earnings for the third fiscal quarter ending March 31 should be about $24.7 million, or 55 cents a share, well above analysts’ projections of 28 to 42 cents a share.

For the same period a year earlier, the disk drive maker reported a profit of $1.6 million, or 5 cents a share.

Haggerty said revenue for the latest quarter will be “north of $425 million,” more than 30% above last year’s third-quarter sales of $325.4 million.

Haggerty said the introduction of high-powered chips on the market by companies such as Intel Corp. and Motorola Inc. has increased the demand for the kinds of high-capacity disk drives that are made by Western Digital.