Summary
Western Digital Corp. (WDC) reported its financial results for the second quarter of fiscal year 2011, ending December 30, 2010. The company demonstrated resilience in a competitive market, with net revenue of $2.475 billion, a slight decrease of 5% from the prior year's quarter but an increase of 1% for the six-month period, totaling $4.871 billion. While unit shipments for hard drives saw a 5% increase year-over-year to 52.2 million units in the quarter, a decline in average selling price (ASP) from $52 to $47 contributed to the revenue decrease. Profitability was impacted by a significant drop in gross margin to 19.2% from 26.2% in the prior year, primarily due to competitive pricing. Operating income also saw a substantial decrease. Despite these pressures, WDC maintained a strong liquidity position, ending the quarter with $3.1 billion in cash and cash equivalents, and generated $505 million in operating cash flow during the quarter. The company continues to invest in research and development, with R&D expenses increasing to support new product development.
Key Highlights
- 1Net revenue for the quarter was $2.475 billion, a 5% decrease year-over-year, while revenue for the six-month period increased 1% to $4.871 billion.
- 2Hard drive unit shipments increased by 5% to 52.2 million units in the quarter.
- 3Gross margin significantly decreased to 19.2% from 26.2% in the prior year's quarter due to a competitive pricing environment.
- 4Operating income declined to $240 million, reflecting the pressure on gross margins.
- 5The company ended the quarter with a robust cash and cash equivalents balance of $3.1 billion.
- 6Operating cash flow for the quarter was strong at $505 million.
- 7Research and Development (R&D) expenses increased to support new product development.