Hutch Tech's loss is much less than expected

Disk drive component maker Hutchinson Technology Inc. beat analyst estimates Tuesday with a first-quarter loss of $12.5 million on revenue of $58.5 million.

The improvement came even though flooding in Thailand had wiped out as much as a third of the company's manufacturing plant capacity late last year, forcing it to scale up its U.S. production.

Hutchinson Technology, based in Hutchinson, Minn., has been struggling to make a comeback since last April, when its financial results forced it to save $55 million a year by cutting its U.S. workforce 30 to 40 percent. The first-quarter results were reported after the market closed Tuesday. Hutchinson stock closed Tuesday at $1.61 a share, up 13 cents or nearly 9 percent.

Hutchinson makes a disk drive component called a "suspension assembly" that holds a data reading and writing chip above a rapidly spinning computer disk. Despite suffering reduced capacity from the Thailand flood, Hutchinson was able to maintain its 20 percent market share because the disk drive industry also cut back the number of drives it made because of the flood.

Hutchinson reported first- quarter earnings of 53 cents a share, and adjusted earnings of 49 cents a share. A consensus of analyst estimates had predicted a loss of 76 cents a share in adjusted earnings, on revenue of $57.9 million.

"It looks like it would be possible for Hutchinson to have a turnaround by the end of the fiscal year in September," although any profit would be small, said Mark Miller, an analyst with Noble Financial Capital Markets in Boca Raton, Fla. "But the stock remains a speculative buy, because there is still significant risk here."

Miller had been expecting a first-quarter adjusted loss of 67 cents on revenue of $57 million.

Hutchinson predicted that its Thailand plant would be operating again by the end of June, although the company will have to spend $25 million to $30 million for plant repairs this fiscal year, and another $5 million next fiscal year. Insurance will pay for about $25 million of the repairs, the company said.

Steve Alexander • 612-673-4553