Western Digital's second-quarter results beat Street on strong enterprise growth

Reuters News
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Posted: Jan 27, 2015 7:58 PM

By Sai Sachin R

(Reuters) - Western Digital Corp, the world's No. 1 hard-disk drive maker, reported second-quarter results slightly ahead of Wall Street expectations on strong demand for its solid-state drives from enterprise customers.

Shares of the company rose 3.5 percent to $101 in after-hours trading.

The company's enterprise sales of solid-state drives rose more than 20 percent to $187 million in the second quarter. Solid-state drives are faster and more reliable than traditional hard disk drives.

"Every enterprise drive sold contributes the equivalent of what 4-6 desktop (PC) drives sold ... enterprise drive shipments were up, average selling prices were up (in the second quarter) - even though the quarter was one week shorter, and all these are encouraging signs," Noble Financial Capital Markets analyst Mark Miller said.

The company also forecast current-quarter adjusted profit of $1.90-$2 per share on revenue of $3.6 billion to $3.7 billion.

Analysts were expecting a profit of $1.99 per share on revenue of $3.73 billion, according to Thomson Reuters I/B/E/S.

Miller, however, said the company had a historical pattern of guiding conservatively and beating its guidance nearly every time.

The company's rival Seagate Technology Plc on Monday forecast third-quarter revenue well below the average analyst estimate and also reported weaker-than-expected second-quarter revenue.

The two hard drive makers are expanding into the growing market for cloud data storage products to help combat continued weakness in the PC market.

Western Digital's net income rose to $460 million, or $1.93 per share, in the quarter ended Jan. 2, from $430 million, or $1.77 per share, a year earlier.

On an adjusted basis, the company earned $2.26 per share, above the average analyst estimate of $2.10, according to Thomson Reuters I/B/E/S.

Revenue fell 2 percent to $3.89 billion, but topped the average analyst estimate of $3.84 billion.

Western Digital's shares had risen nearly 32 percent in 2014.

(Additional reporting by Lehar Maan; Editing by Joyjeet Das, Bernard Orr)