Western Digital counts cost of Thai floods

Hard disk drive vendor claims flood-related charges could top $275m in Q2

Hard disk drive (HDD) vendor Western Digital (WD) claims the fallout from the Thai floods could wipe up to $275m (£176m) off its second-quarter earnings.

Western Digital is one of several HDD vendors that have been forced to halt production at Thailand-based manufacturing plants since the floods hit in October.

The situation has resulted in numerous reports about product supply problems and price hikes, as HDD product stocks in the channel have dwindled.

According to WD's updated financial outlook for Q2, revenue for the quarter is expected to top at least $1.8bn, which is $0.6bn higher than previous forecasts.

Even so, the vendor said it anticipates unexpected flood-related charges in Q2 to be in the region of $225m to $275m, and that HDD supply constraints will continue until at least March.

To recoup some of this, WD is expected to file a claim for at least $50m to cover property damage, and make additional claims for the disruption caused to its business.

In a statement, it revealed production has restarted at one of its HDD factories, which had previously been submerged in six feet of water.

The company confirmed that production at its other HDD site in Navanakorn is not expected to resume for a while, as it remains under two feet of water.

However, the site is to be pumped dry within the next 10 days, paving the way for decontamination and refurbishment work to take place.

John Coyne, president and chief executive officer at WD, said its Thailand operations were being reinstated faster than previously expected.

"Much work remains to be done, but we could not be more pleased with the efforts and results thus far, including tremendous support from our supply partners and strategic customers," he said.