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Western Digital shares plunge on weak outlook caused by supply-chain problems
Shares in Western Digital Corp. plunged in after-hours trading after the company issued a lower-than-expected outlook because of supply-chain problems.
For the quarter ending Dec. 31, Western Digital reported a profit before costs such as stock compensation of $2.30 per share. Revenue in the quarter rose 23%, to $4.83 billion.
Analysts had been predicting an adjusted profit of $1.87 per share on revenue of $4.26 billion.
Western Digital’s Cloud segment drove growth, up 89% year-over-year and accounting for 40% of the company’s revenue. Despite the strong growth, Western Digital noted that supply chain disruptions impacted cloud hard drive deployments at certain customers, leading to a sequential decline in exabyte shipments in the quarter.
The company’s client revenue, which accounted for 38% of revenue, fell 1% year-over-year, with 5G phones offsetting declines in client solid-state and hard drive revenue. Consumer, representing 22% of total revenue, rose 23% year-over-year thanks to a strong holiday season. The WD_BLACK premium product line grew 50% sequentially and doubled through 2021.
“While we continue to experience strong demand across our end markets, these challenges continue to present a headwind to near-term results,” David Goeckeler, chief executive of Western Digital, said in a statement.
Looking forward, Western Digital predicted adjusted earnings of $1.50 to $1.80 in its fiscal third quarter on revenue of $4.45 billion to $4.65 billion. Analysts had been predicting earnings of $1.94 per share on revenue of $4.75 billion.
Although Western Digital is not the only company affected by supply chain issues, the same can’t be said for its rival Seagate Technology Holdings Inc. In its fiscal second-quarter earnings report Wednesday, Seagate beat analysts’ estimates as well, but didn’t miss estimates on its forecast by that much. Seagate estimated third-quarter earnings of $2 per share on revenue of $2.9 billion, whereas analysts had predicted earnings of $2.07 per share on revenue of $2.92 billion.
Seagate shares surged as much as 16% on its earnings report on Wednesday before settling up 7.7% today.
After dropping as much as 13.8% after the bell, Western Digital stock later recovered a bit, down 8%.
Photo: CeBIT Australia/Flickr
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