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Western Digital profit beats on better-than-expected margins

By Soham Chatterjee

(Reuters) - Western Digital Corp, the world's No.1 hard-disk drive maker, reported a stronger-than-expected quarterly profit as it sold more higher-margin products to businesses and consumers.

As personal computer sales decline, Western Digital and Seagate Technology Plc - which dominate the hard-drive industry - are focusing on sales of higher-margin storage products to fast-growing cloud storage firms.

"... Gross margin was higher than expected because the pricing environment for disk-drives is still healthy," FBN Securities analyst Shebly Seyrafi told Reuters.

Noble Financial Capital Markets analyst Mark Miller said Western Digital's gross margin of 28.6 percent was higher than expected, noting that last year's margin of 29.6 percent was inflated by floods in Thailand that hit production.

Western Digital's shares were down 3 percent in extended trading. The stock has gained 66 percent this year.

Net income slid to $495 million, or $2.05 per share, from $519 million, or $2.06 per share, a year earlier.

Excluding items, the company earned $2.12 per share.

Revenue fell about 6 percent to $3.80 billion.

Analysts had expected a profit of $2.05 per share on revenue of $3.78 billion, according to Thomson Reuters I/B/E/S.

Operating expenses fell to $546 million in the quarter ended September 27 from $601 million a year earlier, the company said.

Shares of the Irvine, California-based company were trading at $68.55 after closing at $70.54 on the Nasdaq.

(Reporting by Soham Chatterjee; Editing by Don Sebastian)

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