WESTERN DIGITAL CORP Quarterly Report for Q3 Ended Mar 29, 2013

Summary

Western Digital Corporation (WDC) reported its third-quarter fiscal year 2013 results, showing a notable increase in revenue driven by the full inclusion of HGST's operations following its acquisition. Net revenue grew 24% year-over-year to $3.8 billion, with total hard drive unit shipments up 36% to 60.2 million units. This growth was primarily attributable to the integration of HGST, though partially offset by a lower average selling price (ASP) for hard drives. Despite revenue growth, gross margin saw a decrease to 28.2% from 32.2% in the prior year period, largely due to increased ASPs in the prior year caused by industry-wide supply constraints from the Thailand floods. Operating expenses also rose, influenced by HGST's inclusion and increased R&D investment. The company generated strong operating cash flow of $727 million in the quarter, ending with a robust $4.1 billion in cash and cash equivalents, indicating a healthy liquidity position.

Key Highlights

• 1Consolidated net revenue increased 24% to $3.8 billion, largely due to the full integration of HGST.
• 2Hard drive unit shipments increased by 36% to 60.2 million units.
• 3Gross margin decreased to 28.2% from 32.2% year-over-year, impacted by lower ASPs compared to the prior year's flood-related supply constraints.
• 4Operating income decreased to $417 million, reflecting higher operating expenses including employee termination benefits and increased R&D.
• 5The company generated $727 million in operating cash flow during the third quarter.
• 6Cash and cash equivalents stood at $4.1 billion as of the end of the quarter, indicating strong liquidity.
• 7Non-compute and enterprise markets represented 51% of net revenue, a significant increase from 31% in the prior year period.

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