Western Digital beats estimates, sets upbeat forecast on chip demand

(Reuters) - Western Digital Corp reported better-than-expected profit and revenue on Thursday, as demand for its memory chips used in smartphones and personal computers rose coupled with higher prices for its hard disk drives. The multi-billion dollar memory industry has flourished due to demand from smartphones and cloud services that require more powerful chips to store a massive amount of data. Western Digital and Seagate Technology PLC control most of the world's hard disk drive market. Western Digital said average selling prices in the third quarter rose 14.3 percent to $72 from a year earlier. Analysts on average expected $63, according to financial data and analytics firm FactSet. The company's shares rose about 3 percent following the release of its earnings, but slipped after Chief Executive Officer Stephen Milligan warned that the company's margins are "normalizing" due to an expected drop in NAND prices. The company forecast current quarter adjusted profit in the range of $3.40 and $3.50 per share, above analysts' average estimate of $3.29, according to Thomson Reuters I/B/E/S. The data-storage device maker's net income fell to $61 million, or 20 cents per share for the third quarter ended March 30, after booking a $1.04 billion charge for interest and other expenses. Last year, it earned $248 million, or 83 cents per share. Net revenue rose to $5.01 billion from $4.65 billion. Excluding one-time items, the company reported a profit of $3.63 per share. Analysts on average had expected a profit of $3.30 per share and revenue of $4.93 billion. (Reporting by Sonam Rai and Munsif Vengattil in Bengaluru; Editing by Bernard Orr)