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Western Digital Q1 beats Street but storage device sales slow

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Hard drive maker Western Digital Corp. (NASDAQ:WDC) late Monday said fiscal first-quarter net income more than doubled thanks to the acquisition of a data storage unit of Hitachi earlier this year.

For the three months ended September 28, net profit rose to $519 million, or $2.06 per share, compared to $239 million, or $1.01 per share, a year earlier. Excluding items, earnings came in at $2.36 per share, beating the the $2.29 per share expected by analysts according to FactSet.

Revenue rose 50 per cent to $4.04 billion, higher than the $3.98 billion expected by analysts.

"We are pleased to deliver another quarter of strong financial performance, continuing our track record of consistent execution," Western Digital's CEO John Coyne said. 

"While the macroeconomic environment is dampening near term demand, we remain confident in the continued long-term growth in the creation, storage and management of digital content. Western Digital has never been better positioned to address this opportunity, with great people, deep technology, a broad product portfolio and strong customer and supplier relationships."

Coyne's outlook highlights a slowdown in sales of storage devices to data centers and enterprise customers. Strong growth in this business, which accounts for a third of the company's sales, has so far outweighed a slump in sales to PC makers.

Western Digital signaled weakness in its enterprise business last month when it lowered its revenue outlook, spooking investors and prompting a slew of estimate revisions from analysts.

Tablets have been cannibalizing PC sales and Intel's (NASDAQ:INTC) lackluster outlook last week dispelled lingering hopes for a revival by year-end.

Western Digital said it expects second-quarter adjusted earnings of $1.65 to $1.85 per share on sales of between $3.55 billion and $3.7 billion. Analysts were expecting a profit of $2.40 on revenue of $4.08 billion, according to Thomson Reuters.

Quick facts: Western Digital Corp

Price: 59.48 USD

NYSE:WDC
Market: NYSE
Market Cap: $17.68 billion
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