Komag to miss 2Q estimates, layoff 400 workers

Komag Inc. (Nasdaq: KMAG) became the latest disk-drive manufacturer to warn that its second quarter results are going to be much worse than previously anticipated. Its shares closed up 1/8 to 3 5/16 ahead of the warning.

Company officials said weak sales and sagging average selling prices are responsible for yet another dismal quarter.

First Call consensus expected Komag to lose 55 cents a share in the quarter.

Komag said its second-quarter loss will be wider than the first quarter loss of $21.5 million, or 40 cents a share.

It expects its net sales to be approximately even compared to the first quarter's $90 million, while product unit sales should grow 5 percent. The company had recently forecast product unit sales growth of 20 percent to 35 percent.

"Unit shipments in the last month of the quarter have not materialized as expected due to recent customer order reductions and lower-than-expected volumes on new product programs," said CEO Stephen Johnson in a prepared release.

Komag said it will close one of its manufacturing plants in June, 15 months ahead of schedule, and will layoff some 400 people, or about 20 percent of its U.S. workforce. It added that it will take a second quarter charge of an unspecified amount for the work force reduction and closure.

On Tuesday, Seagate Technology Inc. (NYSE: SEG) warned that it would meet analysts' estimates this quarter. And Western Digital Corp. (NYSE: WDC) sprung the same news on its investors on June 17.

Komag shares hit a 52-week high of 15 5/8 in January.

Three of the five analysts following the stock rate it a "hold."