10-QPeriod: Q3 FY2009

WESTERN DIGITAL CORP Quarterly Report for Q3 Ended Mar 27, 2009

Filed April 24, 2009For Securities:WDC

Summary

Western Digital Corporation (WDC) reported its third-quarter results for the fiscal year ending March 26, 2009. The company experienced a significant decline in revenue, down 17% year-over-year to $1.66 billion, primarily attributed to a challenging macroeconomic environment and decreased demand for hard drives. Despite the revenue drop, WDC managed to improve its gross margin by 190 basis points to 27.6%, driven by effective cost management and a favorable product mix, including a higher proportion of 3.5-inch drives. Net income saw a substantial decrease to $73 million, or $0.32 per diluted share, compared to $247 million, or $1.04 per diluted share, in the prior year's quarter, reflecting lower sales volumes and increased operating expenses. The company's balance sheet remains relatively strong, with total assets of $4.6 billion and total liabilities of $1.7 billion. Cash and cash equivalents stood at $776 million, providing a cushion against the prevailing economic uncertainties. WDC generated $176 million in cash flow from operations during the quarter, demonstrating its ability to produce cash even amidst a revenue downturn. The company continues to invest in research and development and capital expenditures, with significant investments in new product technologies and capacity expansion, signaling a long-term focus on innovation and market position despite short-term headwinds. Investors should monitor the company's ability to navigate the ongoing economic slowdown and maintain its cost control initiatives.

Financial Highlights

26 data points
Beta

Revenue

$1.59B

15.9% Gross Margin

Net Income

$50.00M

3.1% Net Margin

EPS (Diluted)

$0.22

Cash & Equivalents

$1.58B

Free Cash Flow

$355.00M

Financial Statements
Beta
Revenue$1.59B
Cost of Revenue$1.34B
Gross Profit$253.00M
Operating Expenses$192.00M
Operating Income$61.00M
Net Income$50.00M
EPS (Basic)$0.22
EPS (Diluted)$0.22
Shares Outstanding (Basic)223.00M
Shares Outstanding (Diluted)226.00M

Key Highlights

  • 1Revenue for the quarter declined 17% year-over-year to $1.66 billion, impacted by the global economic downturn.
  • 2Gross margin improved to 27.6% from 25.7% in the prior year's quarter, driven by cost efficiencies and product mix optimization.
  • 3Net income significantly decreased to $73 million ($0.32 per diluted share) from $247 million ($1.04 per diluted share) due to lower sales and higher operating expenses.
  • 4Operating cash flow remained positive at $176 million for the quarter, showcasing operational resilience.
  • 5The company maintained a strong cash position with $776 million in cash and cash equivalents.
  • 6WDC continues to invest in R&D and capital expenditures, focusing on next-generation products and manufacturing capabilities.

Frequently Asked Questions

The primary drivers for the revenue decline were the challenging macroeconomic environment and a general decrease in demand for hard drives across various market segments. This reflects the broader economic slowdown impacting consumer and enterprise spending.

The improvement in gross margin was achieved through effective cost management initiatives and a shift in product mix towards higher-margin 3.5-inch drives. This indicates successful operational efficiencies and a strategic focus on more profitable product lines.

While the filing does not provide a forward-looking outlook, the continued investment in R&D and capital expenditures suggests management's confidence in long-term market opportunities and technological leadership. However, the report acknowledges the ongoing economic uncertainties that could continue to impact performance.

The company appears to be in a solid financial position, with a strong balance sheet, significant cash reserves of $776 million, and positive operating cash flow generation of $176 million during the quarter. This provides a good level of liquidity and operational flexibility.