April 26, 2012 at 17:45 PM EDT
WDC Off 8% Despite Upbeat Q4 View; Worries About Op-Ex?
Shares of disk-drive maker Western Digital (WDC) are down $3.57, or 8%, at $40.53, despite the company this afternoon reporting fiscal Q3 revenue and profit per share that topped expectations, and offering a better-than-expected Q4 view. Revenue in the three months ended in March rose 35%, year over year, to $3.04 billion, yielding EPS of [...]

Shares of disk-drive maker Western Digital (WDC) are down $3.57, or 8%, at $40.53, despite the company this afternoon reporting fiscal Q3 revenue and profit per share that topped expectations, and offering a better-than-expected Q4 view.

Revenue in the three months ended in March rose 35%, year over year, to $3.04 billion, yielding EPS of $2.52, beating the average $2.48 billion and $1.59 per share.

Hard drive shipments totaled 44.2 million units.

CEO John Coyne said the results showed “the potential of the new Western Digital, with just three and a half weeks of HGST results combined with the standalone WD business,” referring to the Hitachi storage business the company acquired.

During a conference call with analysts, the company projected Q4 revenue of $4.2 billion to $4.4 billion, and EPS in a range of $2.35 to $2.55 per share.

That is better than the average estimate of $4.05 billion and $2.30 per share.

However, it seems some investors may be blanching at the mention on the call of a projected $550 million in R&D and SG&A spending this quarter, which would be a big jump up from last quarter’s $420 million.

One analyst observed on the call that the amount “would imply no cost savings from HGST [...] is there not even, you know, any amount of OpEx cut there or savings or synergy do you think you’re actually going to be able to get near term, you know, before two years?”

Coyne replied that because the Hitachi acquisition was still going through regulatory approvals, he would not talk about “synergies“:

We’re working on certain synergy proposals that are compliant with this plan and we’re going to report what these synergies are when we finalize the plan with China’s MOFCOM.

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