01—Abstract
Summary
Summary of the 10-K filed August 13, 2010. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation's (WDC) 2010 10-K report highlights a period of significant growth and strategic expansion.
The company experienced a substantial 32% increase in net revenue, reaching $9.8 billiona, driven by a 33% rise in hard drive unit shipments to 194 million units. This growth was particularly strong in the mobile PC market, with shipments of mobile drives increasing by 45% year-over-year. The company also saw a notable improvement in its gross margin, which rose to 24.4% from 17.9% in the previous year, attributed to higher volumes, lower costs, and a favorable product mix.
Strategically, WDC continues to diversify its revenue streams, with 64%b of its hard drive revenue in 2010 coming from non-desktop markets, including consumer electronics and enterprise applications. The company also made a key acquisition of Hoya Corporation's magnetic media sputtering operations to strengthen its vertical integration and meet growing demand.
WDC's financial health appears robust, with a significant increase in cash and cash equivalents and a strong balance sheet, positioning it well for future investments and market opportunities. The company also successfully executed its strategy of expanding into new markets, including the traditional enterprise market, and improving its product portfolio.
02—Key points
Key Highlights
- Net revenue surged by 32% to $9.8 billion in fiscal year 2010, driven by a 33% increase in hard drive unit shipments.
- Gross margin improved significantly, increasing to 24.4% of net revenue from 17.9% in the prior year.
- The company's diversification efforts are evident, with 64% of revenue now derived from non-desktop markets.
- WDC made a strategic acquisition of Hoya Corporation's magnetic media sputtering operations for $233 million to enhance its vertical integration.
- Operating income more than doubled, increasing to $1.5 billion from $519 million in the prior year, reflecting improved operational performance.
- Net income saw a substantial rise to $1.38 billion, or $5.93 per diluted share, compared to $470 million, or $2.08 per diluted share, in fiscal year 2009.
- The company ended fiscal year 2010 with a strong cash and cash equivalents balance of $2.73 billion, up from $1.79 billion at the end of fiscal year 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Western Digital Corp kept $0.14.
- Revenue$9.85B100.0%
- Cost of revenue−$7.45B75.6%
- Gross profit$2.40B24.4%
- Operating costs−$876.0M8.9%
- Operating income$1.52B15.5%
- Interest, other & tax−$143.0M1.5%
- Net income$1.38B14.0%
Where FY2010 revenue went
$9.85B- Cost of revenue: $7.45B, 76% of revenue
- Net income: $1.38B, 14% of revenue
- SG&A: $265.0M, 2.7% of revenue
- Other operating costs: $611.0M, 6.2% of revenue
- Interest, other & tax: $143.0M, 1.5% of revenue
Kept 14% as net incomeInterest, other & tax $143.0M · 1.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed August 13, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $9.85B$7.45B | +32.2% |
| Cost of Revenue | $7.45B$6.12B | +21.8% |
| Gross Profit | $2.40B$1.34B | +79.6% |
| SG&A Expenses | $265.00M$201.00M | +31.8% |
| Operating Expenses | $876.00M$818.00M | +7.1% |
| Operating Income | $1.52B$519.00M | +193.8% |
| Net Income | $1.38B$470.00M | +194.0% |
| EPS (Basic) | $6.06$2.12 | +185.8% |
| EPS (Diluted) | $5.93$2.08 | +185.1% |
| Shares Outstanding (Basic) | 228.00M222.00M | +2.7% |
| Shares Outstanding (Diluted) | 233.00M226.00M | +3.1% |
05—Questions
Frequently Asked Questions
What were the key drivers of Western Digital's revenue growth in fiscal year 2010?
Western Digital's revenue growth in fiscal year 2010 was primarily driven by a significant increase in hard drive unit shipments, particularly in the mobile PC market, fueled by strong demand for notebook and netbook computers. The company also benefited from expansion into non-desktop markets like consumer electronics and enterprise applications.
How did Western Digital's profitability change in fiscal year 2010 compared to 2009?
Western Digital experienced a substantial improvement in profitability. Gross margin increased significantly to 24.4% from 17.9%, and operating income more than doubled to $1.5 billion. This was reflected in net income, which rose to $1.38 billion, or $5.93 per diluted share, from $470 million, or $2.08 per diluted share, in the prior year.
What strategic initiatives did Western Digital undertake in fiscal year 2010?
Key strategic initiatives included the acquisition of Hoya Corporation's magnetic media sputtering operations to strengthen vertical integration, continued investment in research and development to support new product programs, and expansion into new markets like the traditional enterprise sector. The company also focused on optimizing its product mix and cost structure.
What is Western Digital's financial position and outlook based on this filing?
The company's financial position is strong, with a substantial increase in cash and cash equivalents to $2.73 billion. The robust revenue growth, improved margins, and increased profitability indicate a positive outlook. Management expects capital expenditures for fiscal year 2011 to be between 7% and 8% of revenue, suggesting continued investment in growth and operational capabilities.
06—Continue