Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: Lee Martin who wrote (7253)	11/8/1997 10:46:00 AM
From: Will Cunningham	Respond to of 11057

Lehman maintains Outperform (cautiously): Headline: Western Digital: Pre-Announces Downward 2Q, Reducing Estimates Author: Kimberly Alexy, CFA 1(212)526-3141 Rating: 2 Company: WDC SEG QNTM Country: EPS CUS Industry: COMPUT Ticker : WDC Rank(Prev): 2-Outperform Rank(Curr): 2-Outperform Price : $23 7/8 52wk Range: $55-26 Price Target: $47 Today's Date : 11/07/97 Fiscal Year : JUN ------------------------------------------------------------------------------ EPS 1997 1998 1999 - - QTR. Actual Prev. Curr. Prev. Curr. Prev. Curr. 1st: 0.35A 0.67A 0.67A - -E - -E - - 2nd: 0.67A 0.84E 0.22E - -E - -E - - 3rd: 0.87A 0.90E 0.46E - -E - -E - - 4th: 0.95A 1.02E 0.66E - -E - -E - - ------------------------------------------------------------------------------ Year:$ 2.85A $ 3.44E $ 2.01E $ - -E $ - -E $ - $ - Street Est.: $ 3.92E $ 3.44E $ 4.81E $ 4.23E $ - - $ - - ------------------------------------------------------------------------------ Price (As of 11/6): $30 1/4 Revenue (1997): 4.2 Bil. Return On Equity (97): 47.0 % Proj. 5yr EPS Grth: N/A Shares Outstanding: 94.0 Mil. Dividend Yield: N/A Mkt Capitalization: 2.84 Bil. P/E 1998; 1999 : 9.0 X; N/A Current Book Value: $6.60 /sh Convertible: - -Debt- to-Capital: 0.0 % Disclosure(s): None ------------------------------------------------------------------------------ ****************************************************************************** * This morning, Western Digital announced that pricing pressure and production issues will negatively impact earnings for the quarter. Management gave EPS guidance of $0.20-$0.30, compared to previous First Call consensus of $0.83. * The company described an environment of highly aggressive pricing in desktop drives, particularly in the distribution channel. Fujitsu was cited as the chief price aggressor. * Unit guidance remains in the 7.3MM to 7.5MM range for the quarter. However, price erosion - already double-digit and 2%-3% more than normal - is expected to continue to worsen. Ramp issues in 1.7GB/platter TFI are hurting costs and mix. * WD plans to respond to these issues by speeding its transition to MR, upping its mix outlook to 50% MR in the March quarter and 75% MR in the June quarter. The current quarter may see a charge of $15-$30MM related to TFI issues. * We are reducing our 2QFY98 EPS estimates to $0.22, on pricing and transition issues. The company has deferred 2H guidance until Comdex; we will likely revisit our 2H numbers thereafter. We cautiously maintain our 2-Outperform rating on the shares. ******************************************************************************