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| Wednesday, September 06, 2006 |
Shares of Komag Inc. tumbled 15 percent Wednesday, after the maker of thin-film computer disks cut its third-quarter sales forecast due to slowing demand.
The news also dragged down shares of disk drive makers Seagate Technology and Western Digital Corp. Komag makes thin-film media for disk drives made by Seagate and Western Digital, two of the company's largest customers, among others.
Komag said Wednesday morning it expects third-quarter sales between $233.6 million and $240.6 million, or flat to 3 percent higher than the second quarter. This is below the company's earlier forecast of a 5 percent growth sales growth, or $245.3 million, as well as Wall Street's expectations.
Citing weaker demand and the easing of supply constraints, Bear Stearns analyst Andrew J. Neff downgraded Komag to "Peer Perform" from "Outperform," and said the company's guidance is "incrementally negative" for hard disk drive vendors like Seagate and Western Digital.
Komag's shares fell $5.27 to $30.99 in midday trading on the Nasdaq, having changed hands between $24.49 and $54.98 in the past 52 weeks.
Seagate's shares, meanwhile, fell $1.70, or 7.6 percent, to $20.53, and Western Digital slipped $1.36, or 7.4 percent, to $16.97 on the New York Stock exchange.
Komag also lowered its net margin outlook to between 14 percent and 16 percent, below its prior guidance of between 16 percent and 17 percent.
Neff lowered his earnings 2006 estimates to $4.45 per share from the prior $4.90 per share. On average, analysts polled by Thomson Financial are looking for earnings of $4.83 per share for the year. |
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