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Western Digital (NASDAQ:WDC) is expected to report Q3 earnings after the market close on Thursday, April 26, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is $1.55 for EPS and $2.41B for revenue, according to First Call. Analysts expect Western Digital will post earnings growth of 135%, its best performance in a year. Seagate Technology (NASDAQ:STX), Western Digital's main rival, was hit last summer by the floods in Thailand, though not as badly. Seagate just posted quarterly results that beat earnings and revenue estimates. Wall Street analysts expect Western Digital to follow the same pattern. The company has stunned analyst targets in each of the last three quarters, but these estimates appear to take the new pricing environment into account. Western Digital expects to get back to 60% of its pre-flooding production levels in this quarter and 100% in another two quarters. Investors will be looking for a fresh update on the production and demand situations alongside the raw numbers. Management Q3 guidance calls for adjusted EPS of $1.15-$1.45 on revenue of $2B-$2.15B. Management expects to ship 31M-33M drives in Q3.

Analyst Views

Analyst Shebley Seyrafi at FBN Securities expects WDC to have shipped 49M units vs.37M in FQ2. WDC expects FY12 capex if forecasts at approximately $750M-$800M. Specific areas of focus on the call will include: 1) the pace of price declines in the coming quarters; 2) target long-term gross margin structure with the inclusion of higher-margin products; 3) potential for opex synergies in light of the China Mofcom restrictions; and 4) a capital allocation strategy with its strong cash position and very strong free cash flow generation in the coming quarters.

Source: Earnings Preview: Western Digital