10-KPeriod: FY2009

WESTERN DIGITAL CORP Annual Report, Year Ended Jul 3, 2009

Filed August 14, 2009For Securities:WDC

Summary

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 billion 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 million, 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.

Financial Highlights

50 data points
Beta

Revenue

$7.45B

17.9% Gross Margin

Net Income

$470.00M

6.3% Net Margin

EPS (Diluted)

$2.08

Total Assets

$5.29B

Cash & Equivalents

$1.79B

Free Cash Flow

$786.00M

Financial Statements
Beta
Revenue$7.45B
Cost of Revenue$6.12B
Gross Profit$1.34B
SG&A Expenses$201.00M
Operating Expenses$818.00M
Operating Income$519.00M
Net Income$470.00M
EPS (Basic)$2.12
EPS (Diluted)$2.08
Shares Outstanding (Basic)222.00M
Shares Outstanding (Diluted)226.00M

Key Highlights

  • 1Revenue 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.
  • 2Gross 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.
  • 3Net income fell to $470 million ($2.08 per diluted share) in FY2009 from $867 million ($3.84 per diluted share) in FY2008.
  • 4The company completed the acquisition of SiliconSystems, Inc. for $66 million, expanding its presence in the solid-state drive (SSD) market.
  • 5WDC implemented a restructuring plan, including the closure of a manufacturing facility and headcount reductions, resulting in $112 million in restructuring charges.
  • 6Revenue from non-desktop sources increased to 62% of total revenue in FY2009, up from 56% in FY2008, highlighting a strategic shift towards diversification.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.