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Western Digital profits jump

The disk drive maker reports substantially increased earnings of 95 cents a share, a penny shy of analysts' estimates for the company's fourth quarter.

Western Digital (WDC) reported a jump in revenue and profits, but missed expectations by a sliver.

For its fourth quarter ending in June, the maker of disk drives for personal computers reported earnings of 95 cents a share, while a consensus of analysts expected 96 cents a share, according to First Call. In the same quarter last year, the company recorded 36 cents per share.

The company's stock leaped nearly 10 percent in early trading, but ended the day at 41, up 11/16 from yesterday's close of 40-5/16, breaking its own record high.

Deutsche Morgan Grenfell analyst Joel Pitt recently picked up Western Digital as "accumulate," noting that its enterprise systems group, which became profitable ahead of schedule in the March quarter, is giving the company a foothold in the high-margin, high-performance drive market. The company's recent entry into the mobile drive market provides additional channels for generating revenue.

Revenue in the fourth quarter totaled $1.08 billion, a 32 percent increase from last year's results of $82.7 million, and off slightly from the March quarter's results of $1.1 billion.

The company shipped approximately 6.2 million disk drives in the fourth quarter, compared with 4.6 million units in the year-ago quarter and 5.9 million in the preceding quarter.

For full-year results, Western Digital reported net income of $267.6 million, or $2.85 per share, compared with net income of $96.9 million, or $1.00 per share in fiscal 1996. Revenue totaled a record $4.18 billion, up from $2.87 billion in fiscal 1996. Disk drive unit shipments grew to 23.1 million drives from 15.3 million the previous year.

The company's return on invested capital for the fiscal year rose to 51 percent. In May, its board of directors approved a two-for-one stock split, increasing the number of common shares to 86 million from 43 million.

Competitors' stocks also gained ground today: Segate (SEG) gained 1-7/16 to 40-3/4, while Quantum (QNTM) gained 2-15/16 to 27-5/8.