Western Digital to Sell SANavigator Unit

Putting one of the final touches on its long restructuring, Western Digital Corp. said Wednesday that it will sell a software unit to a Colorado company for $29.75 million.

The Lake Forest disk drive maker said it will sell its SANavigator Inc. unit to networking and data storage maker McData Corp., based in Broomfield, Colo. SANavigator makes software that manages storage-area networks, sophisticated systems that store large amounts of computer data.

The sale is part of Western Digital’s plan to cut costs of developing new products beyond its core hard disk drives. Last month, it sold its Connex Inc. subsidiary, which makes smaller network storage devices, for $11 million.

SANavigator was split from Connex in March, and both remained headquartered in San Jose. The business was originally Crag Technologies, which Western Digital acquired for $12 million in stock in February 1999.

The sale of both units represents a welcome investment gain for Western Digital, which has lost more than $1 billion in its last four fiscal years, including a $61.2-million loss for the fourth quarter ended June 30.

The company figured that developing SANavigator would require a significant investment in the long term and that competitors already had grabbed much bigger slices of the market.

Executives believed that McData was better positioned in that field to expand SANavigator’s business.

With nearly $2 billion in annual sales, Western Digital is the world’s third-largest maker of computer hard drives.

Part of its strategy is to use its technology to create hard drives for a new generation of gadgets, such as disk drives for video game units, digital TV recorders, portable music players and medical equipment.

Western Digital stock gained 51 cents, or 16%, to close at $3.57 on the New York Stock Exchange. McData lost $1.35, or 9.5%, to close at $12.85 on Nasdaq.