Western Digital recalled 400,000 hard drives last week after company tests uncovered a faulty internal chip in a move set to cost it over $US20 million.
The recall covers the company's WD Caviar 6.8GB-per-platter desktop hard disk series, with capacities ranging from 6.4GB to 20.5GB and operating at 5400rpm, the company reports.
The flaws are in disks built between August 27 and September 24, which mean most have not yet been placed in com-puter systems by WD's customers, said company spokeswoman Brenda Bennett.
"There is a faulty chip in the drives that causes them to fail to power up within six to 12 months of use," Bennett said. The company refuses to name the chip manufacturer.
A total of 1 million drives contained the flaws, although some 600,000 had not yet been shipped, she said.
Victor Tan, managing director of Western Digital's main Australian distributor Westan, estimates Western Digital will be up for at least $US50 to repair each faulty drive, which when multiplied by 400,000 will cost the vendor at least $US20 million.
He said Westan notified its reseller base of the recall via a fax mail-out last Thursday night and promised to credit all of the faulty drives returned. Western Digital's other Australian distributor is Servex, which is only just beginning to distribute the drives.
Tan estimates Westan has sold about 500 of the drives built within the faulty manufacturing window, and regrets that in the short term he will not have enough products in stock to replace the faulty units.
But here's the twist. Tan said thieves broke into the company's Melbourne office on the night of the AFL Grand Final two weeks ago.
"The burglars actually took 1000 pieces of that product," Tan said. "Now we are thinking what do we do?"
Tan said any customer who returns one of the stolen drives to discover it was stolen will be put in touch with the police to help with their investigations.
The recall follows other financial troubles besetting the company.
Western Digital warned recently that losses for the first fiscal quarter ending October 2 would be between $US1.20 and $1.30 per share, worse than the consensus estimated loss of $1.07, Bennett confirmed.
"They are losing money," said Jim Porter, an analyst with Disk Trends, an industry research firm. "Things aren't pretty."
Porter said Western Digital has lost market share in the past two years to IBM and other disk makers.