Western Digital Corp., a maker of disk drives and networking products, plunged the most in more than seven years after saying prices are lower in the current quarter than they were at the beginning of the year.
Shares of the Irvine, California-based company tumbled 14 percent to $37.93 at the close in New York, for the biggest decline since July 2004. The stock was the worst performer in the Standard & Poor’s 500 Index.
Chief Executive Officer John Coyne said on a conference call yesterday that “prices are lower in the June quarter than they were in the March quarter, based on the total package offered.” The reductions may have surprised investors because rival Seagate Technology Plc. last week said prices were stable, said Mark Moskowitz, an analyst at JPMorgan Chase & Co.
“The company is signaling that the price declines are integral to Western Digital scaling to its volume its recovered operations,” Moskowitz said in a note to clients today, referring to efforts to rebound from supply constraints caused by last year’s floods in Thailand. He has a neutral rating on the shares and recommends “investors take advantage of any near-term weakness.”
Seagate Chief Executive Officer Stephen Luczo said “pricing has remained fairly stable,” on an April 17 conference call with investors.