10-KPeriod: FY2013

WESTERN DIGITAL CORP Annual Report, Year Ended Jun 28, 2013

Filed August 19, 2013For Securities:WDC

Summary

Western Digital Corporation (WDC) has filed its 2013 10-K report, detailing its operations for the fiscal year ending June 28, 2013. The company, a leading developer and manufacturer of storage solutions, reported significant revenue growth driven by the full-year inclusion of HGST operations, acquired in March 2012. Despite a slight decrease in average selling prices (ASPs) for hard drives, WDC saw a substantial increase in net revenue to $15.4 billion. A key strategic shift noted is the increasing reliance on non-PC markets, which accounted for 50% of net revenue in fiscal 2013, up from 19% in fiscal 2012. This diversification indicates a strategic move away from the declining PC market. The company faced challenges including a significant charge of $681 million related to an arbitration award from Seagate Technology LLC. Additionally, increased research and development (R&D) and selling, general, and administrative (SG&A) expenses, largely due to the HGST acquisition and ongoing product development, impacted profitability. Despite these headwinds, WDC continues to invest in growth areas like solid-state storage with the pending acquisition of sTec, Inc., positioning itself for future opportunities in the evolving data storage landscape.

Financial Highlights

29 data points
Beta

Revenue

$15.35B

28.4% Gross Margin

Net Income

$980.00M

6.4% Net Margin

EPS (Diluted)

$3.98

Free Cash Flow

$2.17B

Financial Statements
Beta
Revenue$15.35B
Cost of Revenue$10.99B
Gross Profit$4.36B
SG&A Expenses$706.00M
Operating Expenses$3.10B
Operating Income$1.27B
Net Income$980.00M
EPS (Basic)$4.07
EPS (Diluted)$3.98
Shares Outstanding (Basic)241.00M
Shares Outstanding (Diluted)246.00M

Key Highlights

  • 1Net revenue increased by 23% to $15.4 billion in fiscal year 2013, largely due to the full-year inclusion of HGST operations.
  • 2The company is strategically shifting focus, with non-PC markets accounting for 50% of net revenue in fiscal 2013, up from 19% in fiscal 2012.
  • 3Hard drive average selling prices (ASPs) slightly decreased to $61 from $62 in the prior year.
  • 4Research and Development (R&D) expenses increased by 49% to $1.6 billion, reflecting investments in product development and the HGST acquisition.
  • 5Western Digital recorded a significant $681 million charge related to an arbitration award from Seagate Technology LLC.
  • 6The company initiated a quarterly cash dividend policy in fiscal year 2013.
  • 7A pending acquisition of sTec, Inc. for approximately $340 million is expected to bolster WDC's solid-state storage capabilities.

Frequently Asked Questions

The primary driver of Western Digital's revenue growth in fiscal year 2013 was the full-year inclusion of operations from HGST, which was acquired in March 2012. This acquisition significantly expanded the company's scale and market reach.

Western Digital is strategically diversifying its revenue streams by increasing its focus on non-PC markets, such as enterprise applications, branded products, and consumer electronics. These markets accounted for 50% of net revenue in fiscal year 2013, a significant increase from 19% in fiscal year 2012, indicating a strategic shift away from reliance on the PC market.

The company faced a significant challenge in the form of a $681 million charge related to an arbitration award from Seagate Technology LLC. This charge impacted operating income and net income for the fiscal year. Additionally, increased R&D and SG&A expenses associated with the HGST acquisition and product development also affected profitability.

Western Digital is actively investing in and expanding its presence in the solid-state storage market. This is evidenced by the pending acquisition of sTec, Inc. for approximately $340 million, which is intended to enhance HGST's enterprise SSD capabilities and accelerate the company's participation in this rapidly growing segment.