Summary
Western Digital Corporation (WDC) reported results for its second fiscal quarter ended December 30, 2011. The company's revenue declined year-over-year due to significantly lower hard drive unit shipments, largely attributed to the severe flooding in Thailand in October 2011. This event disrupted the company's manufacturing operations and the broader hard drive supply chain, leading to industry-wide supply constraints. Despite the revenue decline, WDC saw a substantial improvement in gross margin percentage driven by significantly higher average selling prices (ASPs) for hard drives, a direct consequence of the supply shortages. However, the company also incurred substantial charges related to the flooding, impacting operating income. Looking ahead, WDC is focused on recovering production capacity, managing supply chain challenges, and continuing the planned acquisition of Hitachi Global Storage Technologies (HGST), which is subject to regulatory approvals.
Financial Highlights
50 data points| Revenue | $2.00B |
| Cost of Revenue | $1.35B |
| Gross Profit | $648.00M |
| SG&A Expenses | $96.00M |
| Operating Expenses | $486.00M |
| Operating Income | $162.00M |
| Net Income | $145.00M |
| EPS (Basic) | $0.62 |
| EPS (Diluted) | $0.61 |
| Shares Outstanding (Basic) | 234.00M |
| Shares Outstanding (Diluted) | 237.00M |
Key Highlights
- 1Net revenue for the quarter was $2.0 billion, a decrease of 19% compared to the prior year, primarily due to a 45% decrease in hard drive unit shipments.
- 2Gross margin percentage significantly improved to 32.5% from 19.2% in the prior-year period, driven by higher average selling prices (ASPs) resulting from industry-wide supply constraints caused by the Thailand flooding.
- 3The company incurred $199 million in charges related to the Thailand flooding, impacting operating expenses and including fixed asset impairments, recovery charges, and inventory write-downs.
- 4Operating income was $162 million, a decrease from $240 million in the prior-year period, impacted by lower revenues and flood-related charges, partially offset by improved gross margins.
- 5Net income was $145 million ($0.61 per diluted share), down from $225 million ($0.96 per diluted share) in the prior-year period.
- 6The company ended the quarter with a strong cash position of $3.9 billion in cash and cash equivalents.
- 7The planned acquisition of Hitachi Global Storage Technologies (HGST) is progressing, with certain regulatory approvals obtained, but remains subject to approvals from the U.S. and China.