Western Digital Expects Profit to Beat Estimates

Computer disk drive maker Western Digital Corp. said Thursday that stronger-than-expected demand during the holiday season, partly from sales of the Xbox gaming system, is pushing quarterly sales and profit ahead of estimates.

The Lake Forest-based company said it expects to post operating profit of 4 cents a share for its fiscal second quarter ending Dec. 28. Analysts were expecting the company to earn 1 cent, according to a survey by Thomson Financial/First Call.

The operating profit, which excludes taxes and one-time charges and benefits, would be the firm’s first since its 1998 fiscal first quarter. It has posted net profit in two quarters since then, but both came from one-time gains and benefits.

“We had anticipated solid sequential growth this quarter based on increases in drive shipments to Microsoft for its Xbox gaming system and from additional volumes caused by Fujitsu’s exit from the desktop [hard-drive disk] business,” said Western Digital’s chairman, Matthew E. Massengill.

But he said the company also benefited from higher-than-expected sales of personal computers during the holiday season.

Western Digital said its revenue this quarter should hit $540 million to $550 million, well ahead of the $490 million to $520 million the company previously forecast.

Western Digital said it is shipping 7.5 million units during the three-month period instead of its previous target of 6.5 million.

The company’s revised estimates were released after the stock market closed. The shares were down 40 cents to close at $5.52 on the New York Stock Exchange. In after-hours trading, the shares rose as high as $6.98.