01—Abstract
Summary
Summary of the 10-K filed August 14, 2009. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation (WDC) filed its annual report for the fiscal year ended July 3, 2009.
The company designs, develops, manufactures, and sells hard drives and has recently expanded into media players and solid-state drives (SSDs) through acquisitions. Financially, WDC experienced a revenue decrease of 8% to $7.5 billiona in fiscal year 2009, driven by lower average selling prices (ASPs) despite an increase in unit shipments. Gross margin also declined, reflecting a more competitive pricing environment.
The company reported net income of $470 millionb, or $2.08 per diluted share, compared to $867 million, or $3.84 per diluted share, in the prior year. WDC underwent a restructuring plan, closing a manufacturing facility and reducing headcount, which incurred significant charges. Key strategic moves include the acquisition of SiliconSystems, Inc. to bolster its SSD offerings and a continued shift in revenue mix towards non-desktop sources (62% in 2009 vs. 56% in 2008), indicating a diversification of its business beyond traditional PCs.
02—Key points
Key Highlights
- Revenue decreased by 8% to $7.5 billion in FY2009, primarily due to lower average selling prices (ASPs) despite a 10% increase in unit shipments to 146 million units.
- Gross margin declined to 17.9% in FY2009 from 21.5% in FY2008, attributed to increased product offerings in mobile and branded markets and a more competitive pricing environment.
- Net income fell to $470 million ($2.08 per diluted share) in FY2009 from $867 million ($3.84 per diluted share) in FY2008.
- The company completed the acquisition of SiliconSystems, Inc. for $66 million, expanding its presence in the solid-state drive (SSD) market.
- WDC implemented a restructuring plan, including the closure of a manufacturing facility and headcount reductions, resulting in $112 million in restructuring charges.
- Revenue from non-desktop sources increased to 62% of total revenue in FY2009, up from 56% in FY2008, highlighting a strategic shift towards diversification.
- The company's cash and cash equivalents increased to $1.8 billion at the end of FY2009, up from $1.1 billion at the end of FY2008.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Western Digital Corp kept $0.06.
- Revenue$7.45B100.0%
- Cost of revenue−$6.12B82.1%
- Gross profit$1.34B17.9%
- Operating costs−$818.0M11.0%
- Operating income$519.0M7.0%
- Interest, other & tax−$49.0M0.7%
- Net income$470.0M6.3%
Where FY2009 revenue went
$7.45B- Cost of revenue: $6.12B, 82% of revenue
- Net income: $470.0M, 6.3% of revenue
- SG&A: $201.0M, 2.7% of revenue
- Other operating costs: $617.0M, 8.3% of revenue
- Interest, other & tax: $49.0M, 0.7% of revenue
Kept 6.3% as net incomeNet income $470.0M · 6.3%Interest, other & tax $49.0M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed August 14, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $7.45B$8.07B | −7.7% |
| Cost of Revenue | $6.12B$6.33B | −3.5% |
| Gross Profit | $1.34B$1.74B | −23.1% |
| SG&A Expenses | $201.00M— | — |
| Operating Expenses | $818.00M$733.00M | +11.6% |
| Operating Income | $519.00M$1.01B | −48.4% |
| Net Income | $470.00M$867.00M | −45.8% |
| EPS (Basic) | $2.12$3.92 | −45.9% |
| EPS (Diluted) | $2.08$3.84 | −45.8% |
| Shares Outstanding (Basic) | 222.00M221.00M | +0.5% |
| Shares Outstanding (Diluted) | 226.00M226.00M | 0.0% |
05—Questions
Frequently Asked Questions
What was Western Digital's financial performance in fiscal year 2009?
In fiscal year 2009, Western Digital's net revenue decreased by 8% to $7.5 billion, primarily due to lower average selling prices (ASPs). Net income also decreased to $470 million ($2.08 per diluted share) from $867 million ($3.84 per diluted share) in the prior year. This performance was influenced by a more competitive pricing environment and costs associated with a restructuring plan.
What were the key strategic initiatives undertaken by Western Digital during this period?
Western Digital's key strategic initiatives included the acquisition of SiliconSystems, Inc. to expand its solid-state drive (SSD) capabilities, and a continued focus on diversifying its revenue streams. The company saw a growing proportion of its revenue come from non-desktop sources, such as consumer electronics and enterprise applications, indicating a successful strategic shift away from solely relying on the desktop PC market.
How did the company's product mix and market focus evolve?
Western Digital experienced a notable shift in its revenue mix, with non-desktop sources accounting for 62% of revenue in fiscal year 2009, an increase from 56% in fiscal year 2008. This demonstrates a strategic move to capitalize on growth in markets like mobile computing, consumer electronics, and enterprise solutions. The acquisition of SiliconSystems also signifies an entry and growth strategy in the burgeoning solid-state drive market.
What significant risks did Western Digital highlight in its filing?
The company highlighted several risks, including the impact of negative worldwide economic conditions on sales and operating costs, the difficulty in accurately forecasting market demand, declining average selling prices (ASPs) in the hard drive industry, and intense competition. Other risks included potential product defects, supply chain disruptions, and the challenges of integrating new product lines and technologies.
06—Continue