Summary
Western Digital Corporation (WDC) has filed its annual report for the fiscal year ended July 1, 2011. The company is a global provider of data storage solutions, primarily through hard disk drives (HDDs) and also offers solid-state drives (SSDs) and home entertainment/networking products. The most significant development discussed is the planned acquisition of Hitachi Global Storage Technologies (HGST) for approximately $4.3 billion, expected to close in Q2 FY2012. This acquisition is subject to regulatory approvals and will be financed through cash, debt, and newly issued WDC shares. The company also reported a decrease in net revenue for FY2011 to $9.5 billion from $9.8 billion in FY2010, largely due to a decline in average selling prices (ASPs) for HDDs, despite an increase in unit shipments. Gross margins also saw a significant decrease. Management highlights investments in R&D and sales expansion to support new products and markets. The company continues to emphasize operational excellence, product quality, and strong customer relationships. Key risks include integration challenges with HGST, volatile industry pricing, competition, and global economic conditions.
Financial Highlights
52 data points| Revenue | $9.53B |
| Cost of Revenue | $7.74B |
| Gross Profit | $1.79B |
| SG&A Expenses | $282.00M |
| Operating Expenses | $1.01B |
| Operating Income | $781.00M |
| Net Income | $726.00M |
| EPS (Basic) | $3.14 |
| EPS (Diluted) | $3.09 |
| Shares Outstanding (Basic) | 231.00M |
| Shares Outstanding (Diluted) | 235.00M |
Key Highlights
- 1Western Digital announced the planned acquisition of Hitachi Global Storage Technologies (HGST) for approximately $4.3 billion, expected to close in the second quarter of fiscal year 2012.
- 2Net revenue for fiscal year 2011 decreased by 3% to $9.5 billion, compared to $9.8 billion in fiscal year 2010, primarily due to a decrease in Average Selling Price (ASP) of HDDs from $50 to $45.
- 3Despite lower revenue, total hard drive unit shipments increased to 207 million units in FY2011 from 194 million units in FY2010.
- 4Gross margin percentage declined to 18.8% in FY2011 from 24.4% in FY2010, attributed to an aggressive pricing environment.
- 5Research and Development (R&D) expenses increased by 15% to $703 million in FY2011, reflecting continued investment in new product development.
- 6The company held substantial cash and cash equivalents of $3.5 billion at the end of FY2011, an increase of $756 million from the prior year.
- 7No single customer accounted for 10% or more of net revenue in FY2011 and FY2010, though Dell Inc. represented 10% of net revenue in FY2009.