WESTERN DIGITAL CORP Annual Report, Year Ended Jun 30, 2017

Western Digital Corporation (WDC) reported strong revenue growth in fiscal year 2017, primarily driven by the full year impact of the SanDisk acquisition completed in May 2016. Revenue increased by 47% to $19.09 billion. The company's gross margin also saw significant improvement, rising to 31.8% from 26.4% in the prior year, largely due to the higher-margin nature of SanDisk's NAND-flash products and ongoing manufacturing integration efforts. Despite increased operating expenses, particularly in R&D and SG&A related to the acquisition, operating income saw a substantial jump from $466 million to $1.95 billion. However, the significant increase in debt to finance the SanDisk acquisition led to a substantial rise in interest expense, impacting net income, which grew to $397 million from $242 million in fiscal year 2016. The company's strategy focuses on leveraging innovation and execution to be an industry leader in storage solutions, optimizing its core HDD business, and leading in NAND-flash memory and solutions. Key developments include advancements in 3D NAND technology with BiCS3 (64 layers) and development of BiCS4 (96 layers). The company continues to manage its debt and expects to meet its working capital and capital expenditure needs from current cash flows and available credit facilities. Investors should note the significant debt burden and ongoing integration activities as key factors for consideration.