Western Digital (WDC) management, on a conference call with analysts this afternoon following better-than-expected fiscal Q1 results, forecast fiscal Q2 below analysts’ estimates.
The company cited softness in consumer demand, noting that desktop demand is expected to be “marginally down” while notebook demand will be “marginally up.”
Q2 revenue is expected in a range of $2.3 billion to $2.4 billion, with profit per share of 50 cents to 60 cents. The Street has been modeling $2.48 billion and 93 cents per share.
Given a pick-up in shipment volume of drives in the last two weeks of Q1 — the industry shipped 165 million units, at the high end of its expectations — the company expects some inventory correction in Q2, leading to shipments about flat with last quarter, said CFO Wolfgang Nickl.
Nickl said some “aggressive” pricing of drives seen last quarter had carried over into the current quarter, with particular pressure on prices of 2.5-inch drives.
CEO John Coyne said Western was in the midst of a familiar pattern in the drive business, with competitors trying to take share. “Our observation is that these are temporary skirmishes which do not derail our fundamental long-term profitable growth story as we address these challenges with a tested business model we have developed and honed over time,” said Coyne.
WDC stock, which rose initially following the report, is now down 36 cents, or 1%, at $29.84.
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