Hard times drive Western Digital warning

Price war exacts toll

Western Digital has warned that its loss on earnings for the fourth quarter will be double what analysts expected. The disk drive maker predicted a loss of 90 cents to 98 cents per share for the quarter ending 3 July. This excludes a $20 million restructuring charge announced earlier and associated with its media business. Analysts had predicted a 49 cent loss, according to TechWeb. Western Digital aims to cut its drive production and shipments into the distribution channel. As a result of this, company execs said quarterly sales would equal the third quarter - around $668.5 million. Stiffer than expected competition in the desktop drive product line, which accounts for 90 per cent of revenue, was blamed for the bigger than expected loss. But Western Digital is in good company - Maxtor and Quantum also predicted earnings shortfalls earlier this month. Chuck Haggerty, Western Digital chairman, president and CEO, said: "Current conditions don?t suggest a widening loss [during the coming quarters], but not necessarily a continued improvement." "Suffice to say, the pricing pressures we have seen so far this quarter in the desktop drive business, especially in the last three weeks, are among the worst I have ever seen in the hard drive industry." ®

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