01—Abstract
Summary
Summary of the 10-K filed August 15, 2014. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation's (WDC) 2014 10-K filing reveals a company navigating a dynamic storage market, highlighted by a 1% revenue decrease to $15.1 billiona, primarily due to modest price declines and a shift in product mix, though offset by increased unit shipments.
The acquisition of HGST in the previous year continues to influence the company's structure and operations, with ongoing efforts to integrate these businesses pending regulatory approval from China's MOFCOM. Despite revenue headwinds, WDC demonstrated strong operational performance, with operating income increasing significantly to $1.8 billionb, driven by a focus on operational excellence and growth in enterprise, cloud, and consumer electronics segments. Key strategic initiatives include continued investment in R&D, particularly in SSD technology, and expansion into adjacent markets.
The company is positioned to capitalize on the long-term growth trends of digital data expansion. WDC also returned significant capital to shareholders through share repurchases and dividends, underscoring a commitment to shareholder value while managing substantial R&D investments and potential market risks.
02—Key points
Key Highlights
- Net revenue for fiscal year 2014 was $15.1 billion, a slight decrease of 1% from $15.4 billion in fiscal year 2013.
- Operating income increased significantly to $1.8 billion in fiscal year 2014 from $1.3 billion in fiscal year 2013, with operating margin improving from 8.2% to 11.8%.
- Net income rose to $1.6 billion in fiscal year 2014, or $6.68 per diluted share, compared to $980 million, or $3.98 per diluted share, in fiscal year 2013.
- The company acquired several SSD-focused companies (Virident, sTec, VeloBit) in fiscal year 2014 to strengthen its solid-state storage capabilities.
- Total R&D expenses increased by 6% to $1.7 billion in fiscal year 2014, reflecting continued investment in product development.
- WDC repurchased $816 million of its common stock and paid $295 million in dividends during fiscal year 2014, demonstrating capital return to shareholders.
- The company is still operating its HGST and WD businesses as independent subsidiaries due to regulatory requirements from China's Ministry of Commerce, with an application to lift these restrictions pending.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Western Digital Corp kept $0.11.
- Revenue$15.13B100.0%
- Cost of revenue−$10.77B71.2%
- Gross profit$4.36B28.8%
- Operating costs−$2.57B17.0%
- Operating income$1.79B11.8%
- Interest, other & tax−$174.0M1.2%
- Net income$1.62B10.7%
Where FY2014 revenue went
$15.13B- Cost of revenue: $10.77B, 71% of revenue
- Net income: $1.62B, 11% of revenue
- SG&A: $813.0M, 5.4% of revenue
- Other operating costs: $1.76B, 12% of revenue
- Interest, other & tax: $174.0M, 1.2% of revenue
Kept 11% as net incomeNet income $1.62B · 11%Interest, other & tax $174.0M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed August 15, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $15.13B$15.35B | −1.4% |
| Cost of Revenue | $10.77B$10.99B | −2.0% |
| Gross Profit | $4.36B$4.36B | −0.1% |
| SG&A Expenses | $813.00M$706.00M | +15.2% |
| Operating Expenses | $2.57B$3.10B | −17.0% |
| Operating Income | $1.79B$1.27B | +41.5% |
| Interest Expense | $56.00M— | — |
| Net Income | $1.62B$980.00M | +65.0% |
| EPS (Basic) | $6.88$4.07 | +69.0% |
| EPS (Diluted) | $6.68$3.98 | +67.8% |
| Shares Outstanding (Basic) | 235.00M241.00M | −2.5% |
| Shares Outstanding (Diluted) | 242.00M246.00M | −1.6% |
05—Questions
Frequently Asked Questions
What was Western Digital's financial performance in fiscal year 2014?
In fiscal year 2014, Western Digital reported net revenue of $15.1 billion, a 1% decrease from the prior year. However, operating income saw a significant increase to $1.8 billion, and net income rose to $1.6 billion ($6.68 per diluted share), reflecting improved profitability driven by operational efficiencies and strategic investments.
What are the key strategic initiatives highlighted in the report?
WDC's strategy focuses on developing and manufacturing data storage solutions, capitalizing on digital data growth trends. Key initiatives include continued investment in R&D, particularly in SSD technology through acquisitions like Virident and sTec, expanding into adjacent markets, and maintaining operational excellence. The company also aims to leverage its broad product portfolio to serve diverse markets such as enterprise, cloud, and consumer electronics.
What is the status of the HGST acquisition integration and related regulatory issues?
Western Digital continues to operate its HGST and WD businesses as separate subsidiaries due to conditions imposed by China's Ministry of Commerce (MOFCOM). The company submitted an application in March 2014 to have these restrictions lifted and is awaiting MOFCOM's response. The inability to fully integrate HGST has limited the realization of significant operating expense synergies.
How is Western Digital returning capital to shareholders?
In fiscal year 2014, Western Digital repurchased $816 million of its common stock and paid $295 million in cash dividends. The company has an active stock repurchase program in place, authorized through September 2017, and maintains a quarterly cash dividend policy, demonstrating a commitment to returning value to its shareholders.
06—Continue