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Western Digital Computer Chip Executive Resigns

March 05, 1994|DEAN TAKAHASHI | TIMES STAFF WRITER

IRVINE — A. Travis White, the executive in charge of Western Digital Corp.'s unprofitable computer chip business, has resigned for undisclosed reasons, the company said Friday.

White was executive vice president and general manager of the company's microcomputer products division, which accounted for nearly $38 million--about 10% of the company's $371 million in revenue last quarter. He will stay on as a consultant.

White was the first senior executive hired under Chairman Charles Haggerty, who came to Western Digital as president in June, 1992. White, previously a president and chief executive of chip maker LSI Logic Corp.'s Canadian operation, was brought in to turn around Western Digital's money-losing chip division.

White's departure was considered a surprise but not a significant blow to Western Digital, analysts said.

"It can't be a good thing for continuity when an executive leaves after only a year," said Paul Weinstein, an analyst at Kidder Peabody & Co. in New York, an investment bank. "But I don't think it will hurt the earning power of the company."

The company's computer disk drive business, which accounts for the other 90% of sales, has been profitable and is growing. A disk drive permanently stores data on a personal computer.

Haggerty announced earlier this week that Western Digital's revenue and earnings for the third quarter are expected to be significantly higher than analysts' original expectations. On Friday, the stock closed at $17.625 a share, down 62.5 cents from a day earlier, in trading on the New York Stock Exchange. The stock had been $15.75 a share on Wednesday, before the announcement of earnings expectations.

The chip-making division's sales fell from $45.3 million for the quarter ended in December, 1992, to $38.3 million by Dec. 31, 1993. The division's gross profits, or pre-tax earnings above the costs of selling products, improved from 2% of sales for the quarter ended December, 1992, to 31% of sales for the quarter ended last December.

The company does makes a profit on its sales of storage chips, which are used in computer disk drives, and on its Paradise brand accelerator cards, which boost the video performance of PCs.

The division as a whole is unprofitable largely because of money lost on graphics chips for desktop computers that the company has been unable to bring to the market fast enough, said spokesman Robert Blair.

The company laid off 60 people in January in an unsuccessful attempt to make the division profitable. Western Digital also sold its semiconductor manufacturing plant in Irvine to Motorola in November for $115 million.

That sale, which Haggerty credited to White, lowered the company's costs and enabled it to buy more chips from a variety of manufacturers who offered better prices.

As a result of the sale, "it looks like they took his (White's) marbles away with the sale of the plant," said analyst James Stone at investment bank Pennsylvania Merchant Group in Radnor, Pa.

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