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Western Digital Suffers Steep Loss

Irvine disk drive maker's red ink amounts to $194.7 million, including special charges to cover warranty reserves.


Irvine-based Western Digital Corp. on Monday reported its steepest quarterly loss ever, a deficit of $194.7 million that was highlighted by a one-time charge for anticipated increases in warranty charges.

The company, the third-largest independent manufacturer of computer disk drives, has been bogged down by a combination of falling prices and softer demand for desktop computers, the crisis in Asian economies and its own missteps as far back as two years ago.

Analysts were surprised by the company's $77-million charge to increase warranty reserves to accommodate an expected higher rate of return and higher cost of repairs for disk drives. The company's one-time charges in its fiscal first quarter also included $7.5 million for terminated hedging contracts in the Malaysian currency, the ringgit.

"Our plan to gradually reduce the operating losses and return the company to profitability remains very much on track," said spokesman Robert Blair.

"The recovery is taking place, it's just slow."

The total loss, which amounted to $2.20 a share, was much higher than analysts had anticipated. But excluding one-time charges, the results are in line with the loss of $1.23 per share that analysts had been expecting.

A year ago, the company posted a profit of $62.7 million, or 67 cents a share.

Revenue for the three months ended Sept. 26 fell nearly 41% to $650.9 million from $1.1 billion.

Western Digital's competitors also have been suffering through difficult times.

Last week, industry leader Seagate Technology Inc. of Scotts Valley said its quarterly sales dropped 18%, and Milpitas-based Quantum Corp. said its second-quarter profit fell 83%.

Western Digital reported the results after the U.S. markets closed. The stock closed at $8.13, up 38 cents, on the New York Stock Exchange.

At a Glance:

* Database software company Sybase Inc. reported better-than-expected third-quarter profit of $2.2 million, or 3 cents per share, compared to a net loss of $6 million, or 8 cents a share, a year ago. Revenue fell to $210.2 million from $233 million. Earlier this year, Emeryville-based Sybase laid off 600 employees, or about 10% of its work force, as part of a realignment of its business.

* Thousand Oaks-based Xircom Inc., which markets computer communications products, reported record net income for the fiscal fourth quarter ended Sept. 30 of $7.9 million, or 33 cents, on record sales of $88.1 million, compared with a net loss of $12.8 million, or 57 cents, on sales of $71.3 million a year ago.



California Earnings

A sampling of companies reporting quarterly earnings Monday, ranked by year-over-year growth, and companies due to report today, ranked by analysts' forecast change in earnings per share (EPS) from the year-ago quarter, compiled by First Call:

Reporting Monday


Pct. above/ 1997 Ticker Consensus Actual below 3rd-qtr. Company symbol EPS EPS estimate EPS Ascend Comm. ASND $0.31 $0.32 +3% $0.20 Clorox CLX 0.80 0.81 +1 0.72 Cons. Freightways CNF 0.74 0.78 +5 0.70 Beckman Inst. BEC 0.48 0.47 -2 0.68 McClatchy News. MNI 0.28 0.32 +14 0.41

Year- over-year Company % growth Ascend Comm. +60% Clorox +13 Cons. Freightways +11 Beckman Inst. -31 McClatchy News. -22


Reporting Today


Ticker Consensus Year-ago Predicted Company symbol EPS estimate quarter pct. chg. Peregrine Systems PRGN $0.17 $0.10 +70% ATL Products ATLPA 0.23 0.16 +44 PeopleSoft PSFT 0.17 0.12 +42 Ducommun DCO 0.39 0.31 +26 Well Fargo WFC 3.93 3.23 +22 Avery Dennison AVY 0.54 0.50 +8 Virco Manufacturing VIR 0.71 0.67 +6 Health Care Property HCP 0.76 0.73 +4 Rainbow Technology RNBO 0.23 0.23 0 Hilton Hotels HLT 0.31 0.35 -11 Syncor SCOR 0.21 NA* NA*


*NA= not available

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