Weak outlooks a common thread among chip sector this week
Western Digital Inc. shares plummeted in the extended session Thursday after the data-storage products company issued a weak outlook because of supply-chain problems in the face of strong demand.
Western Digital shares dropped nearly 9% after hours, following a 1.4% decline in the regular session to close at $53.84.
The company forecast earnings of $1.50 to $1.80 a share on revenue of $4.45 billion to $4.65 billion for the fiscal third quarter, while analysts surveyed by FactSet were calling for earnings of $1.94 a share on revenue of $4.75 billion.
"I'm proud of the Western Digital team for delivering another quarter of strong results that exceeded guidance, even in the midst of ongoing supply-chain disruptions and COVID-related challenges," said David Goeckeler, Western Digital's chief executive, in a statement. "While we continue to experience strong demand across our end markets, these challenges continue to present a headwind to near-term results."
The company reported fiscal second-quarter net income of $564 million, or $1.79 a share, compared with $62 million, or 20 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $2.30 a share, compared with 69 cents a share in the year-ago period.
Revenue rose to $4.83 billion to $3.94 billion in the year-ago quarter.
Analysts surveyed by FactSet had forecast earnings of $2.13 a share on revenue of $4.81 billion.
So far, weak outlooks for the March-ending quarter risk becoming a drumbeat for the tech sector at large, given this week's earnings reports.
On Thursday, KLA Corp. shares fell in the extended session after the chip-equipment maker's outlook fell short of Wall Street expectations. That's a day after rival Lam Research Corp. fell short of expected revenue for the quarter and issued a weaker-than-expected forecast because of supply-chain problems, and its shares dropped 6.9% in Thursday trading.
On Wednesday, Intel Corp.'s forecast was also weaker than expected and Wall Street voiced concern about PC sales falling off. Intel shares fell 7% on the day.
The whole chip sector marched toward bear-market territory on Wednesday with the PHLX Semiconductor Index finishing down 4.8%, at 3,249.99, on the day, compared with a 0.5% decline by the S&P 500 index .
A drop below 3,231.61 marks a 20% decline from the SOX index's closing high of 4,039.51 on Dec. 27.
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