01—Abstract
Summary
Summary of the 10-K filed August 21, 2015. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation's (WDC) 2015 10-K filing details a company focused on data storage solutions, including Hard Disk Drives (HDDs) and Solid-State Drives (SSDs).
The report covers the fiscal year ending July 3, 2015, highlighting the company's strategic acquisitions to bolster its enterprise SSD and cloud storage offerings. Despite a slight decrease in net revenue year-over-year, driven by a decline in PC demand, WDC demonstrated resilience with an increase in HDD Average Selling Prices (ASPs) and growth in its enterprise SSD segment. The company is navigating a rapidly evolving storage market characterized by increasing data proliferation and a shift towards cloud computing.
WDC's strategy involves balancing its core HDD business with investments in newer technologies and markets, aiming for operational excellence and collaborative customer relationships. Key risks include intense competition, volatile demand, and the potential impact of technological shifts. The company's financial health appears stable, with a significant cash balance and ongoing share repurchase and dividend programs, though it faces ongoing legal matters, notably the Seagate arbitration award.
02—Key points
Key Highlights
- Net revenue for fiscal year 2015 was $14.6 billion, a 4% decrease from fiscal year 2014, primarily due to an 8% decline in HDD shipments, partially offset by a $2 increase in HDD ASPs to $60.
- Enterprise SSD revenue grew significantly, reaching $811 million in fiscal year 2015, up from $508 million in fiscal year 2014.
- Gross profit margin remained stable at 29.0% in fiscal year 2015, compared to 28.8% in fiscal year 2014.
- Research and development expenses totaled $1.6 billion in fiscal year 2015, reflecting continued investment in product innovation.
- The company acquired Amplidata in March 2015 to strengthen its object storage software capabilities for cloud data centers.
- Western Digital had $5.0 billion in cash and cash equivalents as of July 3, 2015, indicating a strong liquidity position.
- The company repurchased approximately $970 million of its common stock in fiscal year 2015 and paid $418 million in dividends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Western Digital Corp kept $0.10.
- Revenue$14.57B100.0%
- Cost of revenue−$10.35B71.0%
- Gross profit$4.22B29.0%
- Operating costs−$2.61B17.9%
- Operating income$1.61B11.1%
- Interest, other & tax−$146.0M1.0%
- Net income$1.47B10.1%
Where FY2015 revenue went
$14.57B- Cost of revenue: $10.35B, 71% of revenue
- Other operating costs: $1.82B, 13% of revenue
- Net income: $1.47B, 10% of revenue
- SG&A: $788.0M, 5.4% of revenue
- Interest, other & tax: $146.0M, 1.0% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed August 21, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $14.57B$15.13B | −3.7% |
| Cost of Revenue | $10.35B$10.77B | −3.9% |
| Gross Profit | $4.22B$4.36B | −3.2% |
| SG&A Expenses | $788.00M$813.00M | −3.1% |
| Operating Expenses | $2.61B$2.57B | +1.6% |
| Operating Income | $1.61B$1.79B | −10.1% |
| Interest Expense | $49.00M$56.00M | −12.5% |
| Net Income | $1.47B$1.62B | −9.4% |
| EPS (Basic) | $6.31$6.88 | −8.3% |
| EPS (Diluted) | $6.18$6.68 | −7.5% |
| Shares Outstanding (Basic) | 232.00M235.00M | −1.3% |
| Shares Outstanding (Diluted) | 237.00M242.00M | −2.1% |
05—Questions
Frequently Asked Questions
What are Western Digital's main product categories?
Western Digital's primary product categories include Hard Disk Drives (HDDs) and Solid-State Drives (SSDs). They also offer direct-attached storage solutions, personal cloud network attached storage solutions, and cloud data center storage solutions.
How did Western Digital's revenue change in fiscal year 2015 compared to 2014?
Western Digital's net revenue decreased by 4% to $14.6 billion in fiscal year 2015 from $15.1 billion in fiscal year 2014. This decrease was mainly due to a reduction in HDD unit shipments, particularly in the client PC market, which was partially offset by an increase in HDD average selling prices.
What is the company's strategy for future growth?
Western Digital's strategy involves maintaining a strong focus on operational excellence, offering a full portfolio of high-quality storage products, developing collaborative engineering relationships with customers, and strategically investing in profitable and growing markets beyond its core HDD business, such as mobility, solid-state technology, and cloud computing.
What are some of the key risks identified in the filing?
Key risks identified include intense competition leading to declining average selling prices, volatile demand influenced by economic conditions, rapid technological changes potentially making existing products obsolete, and risks associated with integrating acquisitions. The company also faces risks related to its supply chain, potential product defects, and significant legal proceedings, such as the past arbitration award with Seagate.
06—Continue