January 22, 2014 / 11:42 PM / 4 years ago

UPDATE 1-Western Digital sees weak third quarter on cautious spending

* 2nd-qtr adj profit $2.19/shr vs est $2.08

* 2nd-qtr rev $3.97 bln vs est $3.85 bln

* Sees Q3 adj profit $1.80-$1.90/shr vs est $1.95/shr

* Sees Q3 rev $3.65-$3.75 bln vs est $3.73 bln

* Shares fall 2 pct in extended trade

By Soham Chatterjee

Jan 22 (Reuters) - Western Digital Corp, the world’s No. 1 hard-disk drive maker, forecast a tepid third quarter as it expects cautious spending and a decline in the PC market to hit sales.

Shares of the company fell 2 percent in extended trade after closing at $88.08 on the Nasdaq on Wednesday.

The Irvine, California-based company, which dominates the hard-disk drive market along with rival Seagate Technology Plc , said it expects adjusted profit of $1.80-$1.90 per share on revenue of $3.65-$3.75 billion for the current quarter.

The forecast was below analysts’ expectations for a profit of $1.95 per share on revenue of $3.73 billion as the company sees an earlier-than-usual Chinese New Year, cautious spending and a decline in the PC market to hurt demand in the first half of the year.

Global PC shipments fell 10 percent last year, the worst annual drop since research firm Gartner began tracking them.

However, the company said it expects to benefit from an improving global economy and a stabilizing PC market in the latter half of the year.

For the quarter ended Dec. 27, net income rose to $430 million, or $1.77 per share, in the second quarter from $335 million, or $1.36 per share, a year earlier.

Excluding items, the company earned $2.19 per share, beating analysts’ expectations of $2.08 per share.

Revenue rose 4 percent to $3.97 billion. Analysts, on average, were expecting revenue of $3.85 billion, according to Thomson Reuters I/B/E/S.

“Branded products business was seasonally stronger and so really things played out very consistently to our expectation with a bit more strength in gaming and a bit more strength in the notebook business,” Chief Executive Steve Milligan said on a conference call.

Western Digital shipped 63.1 million hard drives of which 54 percent comprised of non-PC sales.

Adjusted gross margin rose to 30.1 percent from 29.8 percent last quarter, while average selling prices for hard-disk drives rose by $2 to $60 during the same period.

The stock, which nearly doubled in value in 2013, has risen by more than 25 percent since the company reported results in October.

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