01—Abstract
Summary
Summary of the 10-K filed August 20, 2008. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation (WDC) reported strong financial performance for the fiscal year ended June 27, 2008.
The company experienced significant revenue growth, increasing by 48% to $8.1 billiona, driven by a substantial increase in unit shipments and a strategic shift towards non-desktop markets, which now account for 56% of revenue. This diversification into consumer electronics, enterprise, mobile, and branded products has proven successful, with significant unit increases in mobile and DVR segments. The company also saw a notable improvement in profitability, with gross margin increasing to 21.5% from 16.5% in the prior year.
This was attributed to a more favorable revenue mix, operational efficiencies, higher utilization, and the integration of recently acquired media operations. Operating income and net income also saw substantial increases, reflecting the company's operational improvements and strategic initiatives. The acquisition of Komag, Inc. in September 2007 for approximately $1 billionb was a key event, enhancing production efficiencies and providing greater control over technology and competitive positioning in the hard drive industry.
Looking ahead, WDC appears well-positioned to capitalize on the growing demand for data storage across various markets. Investments in research and development, particularly in advanced head and media technologies, alongside strategic expansions, underscore the company's commitment to maintaining its competitive edge. The company's financial health is further supported by robust cash flow and a solid liquidity position.
02—Key points
Key Highlights
- Revenue increased by 48% to $8.1 billion in fiscal year 2008, driven by a 37% increase in unit shipments to 133 million units.
- Non-desktop sources accounted for 56% of revenue, up from 43% in fiscal year 2007, indicating successful diversification strategies.
- Gross margin improved significantly to 21.5% from 16.5% in the prior year, reflecting operational efficiencies and a favorable product mix.
- Net income rose to $867 million ($3.84 per diluted share) in fiscal year 2008, compared to $564 million ($2.50 per diluted share) in fiscal year 2007.
- The company completed the acquisition of Komag, Incorporated for approximately $1 billion, strengthening its position in media production and overall manufacturing efficiency.
- Research and Development expenses increased by 52% to $464 million, signaling continued investment in new product development and technology.
- Cash, cash equivalents, and short-term investments increased to $1.1 billion, providing a strong liquidity position.
- The company continued its share repurchase program, with an additional $500 million authorized in April 2008.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Western Digital Corp kept $0.11.
- Revenue$8.07B100.0%
- Cost of revenue−$6.33B78.5%
- Gross profit$1.74B21.5%
- Operating costs−$733.0M9.1%
- Operating income$1.01B12.5%
- Interest, other & tax−$139.0M1.7%
- Net income$867.0M10.7%
Where FY2008 revenue went
$8.07B- Cost of revenue: $6.33B, 78% of revenue
- Net income: $867.0M, 11% of revenue
- Operating costs: $733.0M, 9.1% of revenue
- Interest, other & tax: $139.0M, 1.7% of revenue
Kept 11% as net incomeNet income $867.0M · 11%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed August 20, 2008Financial Statements
| Revenue | $8.07B |
| Cost of Revenue | $6.33B |
| Gross Profit | $1.74B |
| Operating Expenses | $733.00M |
| Operating Income | $1.01B |
| Net Income | $867.00M |
| EPS (Basic) | $3.92 |
| EPS (Diluted) | $3.84 |
| Shares Outstanding (Basic) | 221.00M |
| Shares Outstanding (Diluted) | 226.00M |
05—Questions
Frequently Asked Questions
What was Western Digital's primary strategic move in fiscal year 2008?
The most significant strategic move was the completion of the acquisition of Komag, Incorporated in September 2007 for approximately $1 billion. This acquisition aimed to enhance production efficiencies and improve access to and control over technology within the hard drive industry, particularly by integrating media manufacturing.
How did Western Digital's revenue and profitability change in fiscal year 2008 compared to 2007?
Revenue saw a substantial increase of 48%, rising to $8.1 billion in fiscal year 2008 from $5.5 billion in 2007. Profitability also improved significantly, with gross margin increasing from 16.5% to 21.5%, and net income growing to $867 million from $564 million.
What is driving the shift towards non-desktop markets for Western Digital?
Western Digital is actively diversifying its revenue streams by expanding into non-desktop markets such as mobile (notebook computers), consumer electronics (DVRs, set-top boxes), enterprise applications (servers, workstations), and branded retail products (external storage appliances). This shift is driven by the growing demand for storage in these segments and a strategic effort to reduce reliance on the traditional desktop PC market.
What are the key risks highlighted by Western Digital in this filing?
Key risks include declines in average selling prices (ASPs) due to industry competition and oversupply, the challenge of accurately forecasting market and customer demand, rapid technological changes, reliance on key customers, potential product defects and recalls, and the risks associated with global manufacturing operations concentrated in Asia. Increased costs for raw materials and components also pose a significant risk.
06—Continue