Summary
Western Digital Corporation (WDC) reported its third quarter fiscal year 2011 results, showing a decline in revenue and gross margin compared to the prior year. Revenue decreased by 15% to $2.3 billion for the quarter, primarily driven by a lower average selling price (ASP) of hard drives and a slight decrease in unit shipments. Gross margin contracted significantly to 18.2% from 25.2% in the prior year, attributed to a competitive pricing environment. The company is actively pursuing a major strategic initiative with the announcement of its planned acquisition of Hitachi Global Storage Technologies (HGST) for approximately $4.3 billion, to be funded by cash, debt, and new stock issuance. This acquisition is expected to create a more efficient and innovative storage company with a broader product lineup. Management highlighted that the planned acquisition incurred $10 million in expenses during the quarter, impacting operating income. Despite the revenue and margin pressures, WDC maintained a strong cash position, ending the quarter with $3.2 billion in cash and cash equivalents, supported by $1.2 billion in operating cash flow for the nine-month period.
Financial Highlights
49 data points| Revenue | $2.25B |
| Cost of Revenue | $1.84B |
| Gross Profit | $410.00M |
| SG&A Expenses | $73.00M |
| Operating Expenses | $252.00M |
| Operating Income | $158.00M |
| Net Income | $146.00M |
| EPS (Basic) | $0.63 |
| EPS (Diluted) | $0.62 |
| Shares Outstanding (Basic) | 232.00M |
| Shares Outstanding (Diluted) | 236.00M |
Key Highlights
- 1Revenue for the quarter decreased 15% year-over-year to $2.3 billion, driven by lower average selling prices (ASP) and slightly lower unit shipments.
- 2Gross margin declined significantly to 18.2% from 25.2% in the prior year, primarily due to a competitive pricing environment.
- 3The company announced a significant strategic move with the planned acquisition of Hitachi Global Storage Technologies (HGST) for approximately $4.3 billion.
- 4Acquisition-related expenses of $10 million were incurred during the quarter, impacting operating income.
- 5Operating income saw a substantial decrease of $283 million year-over-year, reflecting lower gross margins and increased operating expenses.
- 6Western Digital maintained a strong liquidity position, ending the quarter with $3.2 billion in cash and cash equivalents.
- 7The company is increasing investment in Research & Development (R&D) by $19 million year-over-year to support new product development.