WESTERN DIGITAL CORP Quarterly Report for Q2 Ended Jan 2, 2015

Summary

Western Digital Corporation's (WDC) Q2 fiscal year 2015 report, ending January 2, 2015, indicates a slight year-over-year revenue decrease to $3.9 billion, primarily due to a dip in hard drive unit shipments. Despite this, total hard drive shipments for the first six months of fiscal 2015 saw a marginal increase. The company maintained its average selling price for hard drives. Operationally, gross margin experienced a slight decline, and R&D expenses increased, signaling continued investment, particularly in the enterprise SSD segment. SG&A expenses decreased due to an insurance recovery. A significant financial event was the payment of $773.4 million to satisfy the arbitration award from Seagate. The company ended the quarter with a robust cash position of $4.9 billion, demonstrating solid liquidity, and continued its capital return program through share repurchases and dividends.

Key Highlights

• 1Net revenue for the quarter was $3.9 billion, a 2% decrease year-over-year, driven by a 3% drop in hard drive unit shipments to 61.0 million units.
• 2Gross margin slightly decreased to 28.5% from 29.1% in the prior year's comparable quarter.
• 3Research and Development (R&D) expenses increased by $10 million year-over-year, reflecting continued investment in the enterprise SSD business.
• 4The company paid $773.4 million to settle the arbitration award with Seagate, funded by cash held outside the United States.
• 5Total cash and cash equivalents stood at a strong $4.9 billion at the end of the quarter, indicating healthy liquidity.
• 6Western Digital continued its capital return strategy with $532 million in share repurchases and $187 million in dividends paid during the six-month period.

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