TECHNOLOGY : Western Digital Warns of Bigger-Than-Expected Loss : Computers: Hard-drive manufacturer says it will post 1st-quarter loss of $109 million to $118 million.

Western Digital Corp. of Irvine said Tuesday that it will report higher losses than expected for its fiscal first quarter ending in October, which would bring its total losses during the last two years to nearly $1 billion and call into question its long-term prospects as an independent company.

The computer hard-drive manufacturer, one of Orange County’s largest technology companies, is suffering through an industrywide slump as production capacity outstrips demand and rivals slash prices.

At least seven major companies make hard drives for desktop personal computers, and many observers view Western Digital as among the weakest in a crowded field that could stand to be trimmed.

“I don’t think Western Digital has any sort of sustainable edge which would suggest that they would be the long-term leader in this market,” said David Takata, an analyst with Los Angeles-based Gruntal & Co.

Western Digital said Tuesday that it will lose from $109 million to $118 million, or $1.20 to $1.30 per share. Analysts had expected a loss of about $1.06 per share, according to a survey by earnings tracker First Call Corp. The quarterly loss would drive up total losses to about $965 million for the last two years.

Sales for the fiscal first quarter ending Oct. 2 are expected to drop to the $550-million-to-$560-million range from $650.9 million a year ago.

IBM Corp. and Fujitsu Ltd. have large operations that can subsidize disk-drive businesses, even if they lose money. Seagate Technology Inc., the largest independent manufacturer of disk drives, has a profitable business in high-end drives for large enterprises that it uses to bolster the low-margin desktop-drive business.

Quantum Corp. sells more disk drives than anyone else, although it, too, is losing money.

That leaves Maxtor Corp., which, like Western Digital, gets the vast majority of its sales from hard drives for desktop PCs, and Samsung Electronics Co., whose future has been clouded by uncertainties in South Korea’s economy.

“It’s an extremely difficult business to be in for virtually all of the participants,” said Jean Orr, an analyst with Nutmeg Securities in Westport, Conn. “Everyone wants to put one or two of these companies together. I think that it’s just as likely that a somewhat unrelated company with deep pockets will see the potential in the business and say, ‘OK, this is an opportunity to get into this business at a cheap price.’ ”

Western Digital officials said they have addressed the factors that led to this quarter’s earnings shortfall, including a shortage of certain components by some suppliers and lower-than-anticipated demand for drives by “a few” computer makers. The next quarter should be better, they said.

In the last year, the company has extensively restructured management and operations. The company now has cut a quarter of its senior executives and employs fewer than 10,000 people, down from 16,000 at its peak in 1997.

Last week, Scotts Valley, Calif.-based Seagate Technology said it would take a $200-million charge against its earnings and slash more than 8,000 jobs during the next nine months, decimating its work force.

Milpitas, Calif.-based Quantum said last month that it would lay off as many as 800 people in the next year in an effort to save $100 million a year.

Western Digital’s shares fell 38 cents to close at $4.25 in New York Stock Exchange trading.