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WD scraps money raising scheme

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Western Digital, the hard drive maker, has withdrawn plans to raise more money through the issue of new shares, because it thinks it can get by without it.

The company points to 'improved fundamentals' in its business; in other words, it is generating enough cash to fund its needs - it's made a profit five quarters in a row now from its hard drive business - and it reckons that this will continue.

WD could have raised up to $167.7m from registered but unsold shares. By ensuring these don't enter circulation, WD ensures that a: existing shareholders don't see their stakes diluted, and b: that there is no nasty surprise to the share price at a difficult time for tech stocks.

WD yesterday reported Q2 net income of $9.2m before -non-recurring investment gains, and $12m when these are included. The HDD business generated $15.3m in operating income for the quarter ended 28 December, 2001.

Revenue was $575m on unit shipments of 7.7m (Q2: 2001$562m on unit shipments of 6.1m, and a net loss before non-recurring items of $7m).

WD has completed the purchase of Fujitsu's HDD manufacturing facility in Thailand, bought presumably for a knockdown price. The exit of Fujitsu from the commodity hard drive business will see WD's market share increase, and should translate into less pressure on industry margins.

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