Hard drive maker Western Digital Corp. (WDC), Thursday reported a surge in second quarter profit bolstered by strong demand and robust shipment of its hard drive products, with a 43.7% jump in revenues. Earnings for the quarter came in well ahead of Street forecast, as did revenues.
For the second quarter, net income of Lake Forest, California-based Western Digital surged to $429 million or $1.85 per share from $14 million or $0.06 per share in the same quarter a year ago.
On average, 21 analysts polled by Thomson Reuters expected earnings of $1.36 per share for the quarter. Analysts, estimate typically excludes one-time items.
Western Digital's prior-year results included $113 million of restructuring charges.
Western Digital's revenues jumped 43.7% to $2.62 billion from $1.82 billion in the prior-year quarter, beating Street estimates of $2.35 billion for the quarter.
The company has been enjoying robust demand for its hard drive products, even in a supply constrained environment, enabling it to register strong profit in the sequential quarter also. Sequentially, in the first quarter, Western Digital, registered a profit that increased 36% to $288 million or $1.25 per share. Revenues were up 5% at $2.21 billion.
The company has also been making a presence felt in the field of Network-attached storage devices for a while that enables Wi-Fi enabled laptops and other devices to use the storage device wirelessly.
Hard Drive shipments during the current quarter amounted to about 49.5 million units, which is a clear improvement over 35.5 million units shipped in the prior year quarter.
The company thus generated a record $557 million in cash from operations during the quarter, ending with total cash and cash equivalents of $2.4 billion.
John Coyne, president and chief executive officer said, "For the third consecutive quarter, we increased output in a supply constrained environment, providing strong support of our customers' growth opportunities, primarily in the consumer segment but, notably, with some emerging strength in the commercial sector."
Amongst others in the industry, Seagate Technology (STX) reported a turn to profit in second quarter from the last year's hefty loss, helped by strong revenue growth and lower operating costs. Net income was $533 million or $1.03 per share, compared to a loss of $2.82 billion or $5.80 per share in the year-ago quarter. Revenues increased to $3.03 billion from $2.27 billion in the prior-year quarter.
For the quarter under review, Western Digital also noted that a moderate pricing environment, combined with a sharp focus on cost and efficiency, enabled gross margins of 26.2%.
Total operating expenses decreased to $214 million from $274 million in the comparable quarter last year. Operating income was $473 million, compared to $16 million in the same quarter last year.
For the six-month period, net income soared to $717 million or $3.10 per share from $225 million or $1.00 per share in the year-ago period. Revenues rose to $4.83 billion from $3.93 billion in the year-earlier period.
On October 15, 2009, brokerage Stifel Nicolaus downgraded Western Digital shares to 'Hold' from 'Buy,' with a mean target of $45.61.
WDC closed Thursday's regular trading at $45.29, up $1.03 or 2.33%, on a volume of 9.29 million shares. In after-hours, the stock further gained $0.29 or 0.64%, to trade at $45.49. In the past 52-week period, the stock traded in a range of $12.01 to $47.44, with a three-month average volume of 3.47 million shares.
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