* Company acknowledges impact of tablets on notebooks
* Amid slow consumer spending, gives downbeat forecast
* Q1 EPS excluding items 84 cents vs Street's 81 cent
* Shares flat in after-hours trading (Adds forecast for Dec. quarter, byline, executive comment)
LOS ANGELES, Oct 19 Western Digital Corp WDC.N sought to reassure investors about the slowing hard-drive business on Tuesday, as the advent of tablet computers eats into computer demand.
The company, which is struggling with waning consumer sentiment, also projected sales below Wall Street's estimates during the normally strong holiday quarter.
Chief Executive John Coyne said tablets such as Apple's (AAPL.O) iPad -- which use flash memory rather than hard-drive storage -- will reduce growth in shipments of low-end laptops and netbooks by 10 to 20 percent over the next few quarters.
"What I would say to investors is to look at the long-term demand for storage, the fact is the most appropriate solution for mass volume storage is hard drives and to look at the long-term progress the industry has made over the last 10 years," Coyne told analysts on a conference call.
"We will continue on that fundamental trend line for the next 10 years."
The hard-drive business has been in upheaval this year, with demand falling off due to a weak PC market. Western Digital stock has shed 35 percent since the start of the year.
But shares in both Western Digital and larger rival Seagate Technology (STX.O) have surged since reports surfaced that Seagate had held talks with private equity investors about going private. [ID:nN14153918]
Some analysts see Western Digital as a good candidate for a leveraged buyout, because its shares are trading at a low price-to-earnings ratio and it generates strong cash flow. Western Digital said on Tuesday it exited the past quarter with $2.9 billion in cash and cash equivalents.
Coyne dodged questions about speculation that his company might consider going that route.
"We don't think the ownership structure is significant. The business model is what we're focused on, and we believe our business model, which we've been refining for 10 years, is the appropriate one for success," he said.
Amid a broad rally for technology companies since Sept. 1, Western Digital's share price has increased 18 percent, which is higher than the 15 percent rise for NASDAQ's tech sector.
For the current quarter, Western Digital forecast revenue of $2.3 billion to $2.4 billion, about even with revenue for the quarter ended Oct. 1 and below analysts' forecast of $2.48 billion, according to Thomson Reuters I/B/E/S.
It predicted earnings per share of 50 cents to 60 cents, which would be below the EPS for the quarter which just ended.
Western Digital, the world's second largest hard-drive maker by revenue, also forecast a total available market for the hard drive industry of 165 million units, which is nearly even with the quarter just ended.
In the quarter just ended, net income fell to $197 million, or 84 cents per share, from $288 million, or $1.25 a share, in the year-ago period.
Analysts on average expected earnings, excluding items, of 81 cents, according to Thomson Reuters I/B/E/S.
Revenue rose to $2.4 billion from $2.2 billion a year ago. Analysts on average had expected revenue of $2.35 billion, according to Thomson Reuters I/B/E/S.
Shares of Lake Forest, California-based Western Digital stayed flat in after-hours trading, after closing down 4 percent to $30.20 on the New York Stock Exchange. (Reporting by Alex Dobuzinskis; Editing by Bernard Orr)