SCIENCE/TECHNOLOGY : New IBM Products May Be Good News for Western Digital

Is there some good news out there for Western Digital Corp., the struggling manufacturer of personal computer components in Irvine, which lost $37.9 million in its most recent quarter?

Maybe so. Western Digital’s biggest customer, International Business Machines Corp., is preparing to launch a raft of new notebook computers, briefcase-size machines that weigh 5 to 8 pounds, during the first half of 1992, sources and industry trade reports say.

Among the products IBM is planning to introduce are a color notebook and a color laptop computer, an enhanced version of its existing notebook computer, and a pen-based computer that uses an electronic pen to input data, sources said.

IBM officials in White Plains, N.Y., and Western Digital officials declined to comment on schedules or specific upcoming product lines.

“We intend to develop a portable computer family,” said Michael Reiter, an IBM spokesman. “You will see additional laptops, notebooks and pen-based computers from us.”

The new IBM products could generate new sales for Western Digital, which last year supplied chips that controlled the video and logic functions of IBM’s first notebook computer, the L40SX. Western Digital also helped design the machine and assisted in manufacturing motherboards for IBM.

In the past two quarters, IBM accounted for at least $50 million in sales for Western Digital, or about 11% of total sales, said Robert J. Blair, Western Digital spokesman.

Roger W. Johnson, chief executive of Western Digital, said in March that IBM would probably generate $50 million to $150 million in sales for Western Digital during calendar 1991. Blair said last week that the forecast has proven correct, though he said he could not be more specific.

And since April, Western Digital has been supplying video and systems logic chips for IBM’s PS/55 Note, another IBM notebook computer that the company sells in Japan. IBM plans to introduce a U.S. version of the PS/55 Note in February, according to trade journal Info World.

If so, analysts speculate that Western Digital would probably supply chips for that machine as well. And lastly: IBM said last week it would make notebook computers for Japanese electronics giant Hitachi Ltd. for sale in Japan. That deal could also generate chip sales for Western Digital.

“This is not something that will pull Western Digital out by itself,” said John Dean, an analyst for Salomon Bros. Inc. in San Francisco. “But what Western Digital needs in the eyes of investors is positive news. I think having major visibility with IBM certainly reinforces that they are solvent, can continue to be solvent, and they have some strong technology.”

Dean cautioned that overall notebook computer sales have slowed in recent months and IBM faces competition from scores of so-called clonemakers.

Blair said a team of Western Digital engineers continues to do development work with IBM, though it is smaller than the team that worked with IBM to design the L40SX.

“Our relationship with IBM has never been stronger,” Blair said.