Western Digital Reports Record Revenue, Profits in Third Quarter : Earnings: The Irvine-based disk drive maker attributes the results to increased demand for multimedia computer systems.

Consumers buying record numbers of disk drives to run splashy computer graphics helped Western Digital Corp. to report on Thursday its best quarterly revenue and earnings in the company’s history.

The maker of disk drives and other computer components reported fiscal third-quarter net income of $28.4 million, or 64 cents a share, up dramatically from $1.6 million, or 5 cents a share, a year earlier. Revenue for the quarter rose to $421 million, up 29% from $325.4 million a year earlier.

Chief Executive Charles Haggerty credited the rise in profits to demand for multimedia computers, which combine text, video, graphics and sound.

Multimedia technology enables computers to run lifelike graphics, but it also requires large-capacity disk drives like those made by Western Digital. Newer, more powerful computer “engines”--the Intel Pentium and Motorola PowerPc microprocessors--have also driven demand up.

The boost in sales has helped counteract the unending financial curse of the disk drive industry: price drops of as much as 15% a quarter. Consumers have loved the price wars, but most of the industry has suffered.

In the third quarter, Haggerty said, prices fell only 6%, and upcoming quarters also look promising. In unprecedented moves, Western Digital and other disk drive companies have raised prices in the past several months. Haggerty said Thursday that the company recently raised prices by 2% on all its products sold as stand-alone components.

Haggerty also said the company has improved its ability to manufacture large volumes of low-cost disk drives and has lower interest expenses since it pared its debt from a peak of more than $200 million to less than $59 million today.

“A financial turnaround is never complete, but certainly we have gone through stages (in a turnaround) that nobody in their wildest dreams ever expected us to do,” he said.

The company has been able to stay ahead of major competitors by launching the latest versions of disk drives in as little as five months, said Paul Weinstein, an analyst at Kidder Peabody & Co., an investment bank in New York.

As a result, Western Digital has been able to attract and keep the largest computer manufacturers as its customers.

“I would say they tie for No. 1 as the best disk drive company” with Seagate Technology Corp., said Roxanne Googin, an analyst for Gruntal & Co. in Los Angeles. “Last year they were tied for the worst.”

For the first nine months of its fiscal year, Western Digital reported net income of $35.8 million, or 91 cents a share, compared to net income of $12.7 million, or 39 cents a share, a year earlier. Revenue was up to $1.07 billion, compared to $940 million a year earlier.

Haggerty said that Western Digital’s computer chip business, which accounts for 10% of revenue, has improved its financial performance but is still not profitable. The company sold its chip plant in Irvine to Motorola Inc. last fall for $115 million as part of an effort to cut its costs.

Western Digital announced its earnings after the market closed Thursday. Its stock closed at $19.50 a share, up $1.25, on the New York Stock Exchange.

Western Digital Revenue Up

For the third quarter ended March 26, Western Digital Corp. reported net income of $28.4 million as its revenue rose to $421 million. The company attributed the gain to a higher demand for multimedia computers. Figures in thousands of dollars, except per-share data:

3rd qtr. 3rd qtr. 9 months 9 months 1994 1993 1994 1993 Revenue $420,878 $325,407 $1,077,448 $940,023 Net income (loss) $28,448 $1,633 $35,837 $12,713 Per share (loss) 0.64 0.05 0.91 0.39

Source: Western Digital Corp.

Researched by DEAN TAKAHASHI / Los Angeles Times