Western Digital’s Losing Streak Ends

Western Digital Corp. of Irvine, long battered by an industry pricing war, Thursday reported a net profit of $4.2 million for the fiscal fourth quarter to end 10 consecutive quarters of net losses.

The earnings for the world’s third-largest disk-drive manufacturer amounted to 3 cents a share. It lost $101.5 million, or $1.12 a share, in last year’s fourth quarter.

Western Digital’s profit for the quarter ended June 30 was aided mainly by a $19.5-million tax benefit. Without the benefit and other one-time gains, the company would have had an operating loss of $15.1 million, still a big improvement over a $95.7-million operating loss a year earlier.

Quarterly revenue fell 33% to $473.9 million for the quarter from $709.3 million for last year’s final three months. The drop was attributed to the company’s decision to stop making hard drives for high-end computers and shut down the Minnesota plant that made them.

Despite the quarterly improvement, Western Digital posted an annual net loss of $188 million, or $1.53 a share. In the previous year, the company lost $492.7 million or $5.51 a share.

Western Digital’s chief executive, Matt Massengill, noted that the company had increased its market share and reduced operating expenses by nearly 30% last year, in part by consolidating three manufacturing operations into a single site in Kuala Lumpur, Malaysia.

“I think the biggest accomplishment was regaining some share position,” Massengill said. Orders from both Compaq Computer Corp. and Dell Computer Corp. accounted for at least 10% each in quarterly revenue, he said.

“We have essentially improved our position in almost every one of our major accounts,” Massengill said. “We were the only publicly traded drive company whose gross [profit] margin was constant quarter over quarter. Everyone else lost ground.” The company also ventured into the hard drive market for consumer products like television set-top boxes, television receivers and audio jukeboxes.