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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Mark Oliver who wrote (3567)	6/9/1998 4:32:00 PM
From: xamir	Read Replies (2) \| Respond to of 9256

Western Digital Warns That Fourth Quarter Results Will Fall Below Wall Street Estimates PR Newswire - June 09, 1998 16:31 WDC %CPR %ERP V%PRN P%PRN IRVINE, Calif., June 9 /PRNewswire/ -- Western Digital Corporation (NYSE: WDC) today announced that due to greater than anticipated industry pricing pressures and reduced unit volumes in its desktop hard drive business, its performance for the fourth fiscal quarter ending June 27, 1998 will fall substantially short of current Wall Street analyst forecasts. The current range of analyst estimates is a loss of $.45 to $.67 per share on revenue in the range of $830 million to $864 million. The Company expects the operating loss for the June quarter to exceed $100 million, before recording certain costs associated with the implementation of its previously-announced component supply and licensing relationship with IBM Corporation. Over the last several quarters, Western Digital has substantially reduced production in the face of the industry's excess inventories, and in the next two months it will implement shorter work weeks in its manufacturing plants in Singapore and Malaysia. This month, it curtailed production in its Santa Clara, California media facility. By the end of the June quarter, WD's workforce will have been reduced 22% since November 1997 to approximately 13,000 employees through attrition and layoffs. The Company indicated that it will continue to review its operations in light of its business model and business conditions. The size of the Company's expected fourth quarter net loss will result, unless cured, in a technical default under the Company's bank credit line at the end of the quarter. The total available credit under the bank agreement is $250 million, of which $50 million is outstanding in the form of a term loan. The Company's borrowing capacity will be subject to the successful re- negotiation of the terms of the credit line agreement. The Company is currently in discussions with its lenders about these matters. Chuck Haggerty, chairman, president and chief executive officer of Western Digital, said: "Despite the reductions in finished goods inventory that we saw among industry leaders last quarter, there remain too many drives in the distribution channel. This has caused a further acceleration of desktop pricing pressure in the channel and at OEM customers in the June quarter." The Company also reported that major OEM customer acceptance of its first and second generation MR head products and of its future product roadmap for both desktop and enterprise drives was very strong. "The plan is in place, and progress is being made, to return Western Digital to time-to-market leadership in the desktop business," Haggerty said. "Our initial MR head programs are establishing a strong base of performance with our strategic OEM customers as we head into the new fiscal year. In the meantime, our Enterprise storage business continues to perform profitably." The Company will report its financial results for the June quarter on July 29, 1998. This release contains forward-looking statements based on current management expectations, including statements related to current and anticipated industry pricing trends, future possible charges, and projected operating results. The forward looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: pricing trends and other competitive factors; final approval of the agreement with IBM; the outcome of discussions concerning the Company's bank credit line; continued success in the ramp of volume production of magnetoresistive-head drives; continued successful qualification of such drives with key OEM customers; business conditions and growth in the personal and enterprise computing industry; changes in customer order patterns, successful reductions in future costs and expenses, and other factors discussed in our form 10-K for the year ended June 28, 1997, our recent form 10-Qs, and our other SEC filings. Western Digital undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements. SOURCE Western Digital Corporation

To: Mark Oliver who wrote (3567)	6/9/1998 4:34:00 PM
From: Mark Oliver	Respond to of 9256

<Looking at Maxtor and what they need to do, a lift in WDC would help. We'll see.> Looks like I spoke too soon. :( Western Digital (WDC) 15 1/2 +1/4: disk-drive maker is warning again that it expects Q4 results to come in below Wall Street estimates. Before one-time charge, WDC sees an operating loss of over $100 mln a pricing pressures and lower unit sales are dragging results downward. According to First Call, WDC was projected to lose $0.55 a share vs, year-ago profit of $0.95 a share.

To: Mark Oliver who wrote (3567)	6/9/1998 4:36:00 PM
From: Sam	Respond to of 9256

So much for a lift in WDC. Guess the line on Maxtor will have to be, "See, they're kicking everyone else's butt, they're the only immune ones, like HMT." Right.

To: Mark Oliver who wrote (3567)	6/9/1998 4:42:00 PM
From: LK2	Read Replies (3) \| Respond to of 9256

>a lift in WDC would help< Unfortunately, WDC just warned today, after the market closed, it appears. I don't have any details, but they should be available before the market opens tomorrow. At 4:26 pm EST, Joe Kernan of CNBC was running down a list of stocks that moved, and (if you ever watch CNBC, you'll know what I mean), one of the semi-rambling/semi-random comments he threw in was that WDC just warned. Like I say, I'm sure the details will be given on the wires/TV before the market opens tomorrow. Regards, Larry Since WDC has been beaten down so much anyway, it's hard to tell what the stock will do. When MOT warned just a few days ago, the stock didn't move. And WDC has been crunched a lot worse than MOT (those are just my comments; they weren't the comments by Joe Kernan). PS: I need to type faster. By the time I entered this message, there were three or four posts on the WDC warning. PPS: But at least I was right that there would be additional information on the WDC warning.