What is the primary driver behind the significant increase in revenue for WDC in this reporting period?

The primary driver for the substantial increase in revenue is the acquisition of SanDisk Corporation, which significantly expanded Western Digital's NAND flash memory product offerings and market presence.

Why did net income for the nine-month period decrease significantly despite revenue growth?

The decrease in nine-month net income is largely due to integration costs and expenses associated with the SanDisk acquisition, increased interest expense from debt financing related to the acquisition, and specific tax-related charges including integration expenses and a valuation allowance on acquired tax attributes.

How has the company's debt situation changed following the SanDisk acquisition?

The company's debt levels remain high, reflecting the financing used for the SanDisk acquisition. Total debt was $13.08 billion as of March 31, 2017. The company has been actively managing its debt facilities by refinancing some tranches at lower interest rates.

What is the outlook for cash flow and liquidity?

Western Digital expects its current cash, cash equivalents, cash generated from operations, and available credit facilities to be sufficient to meet its obligations for at least the next twelve months. However, the significant debt from the acquisition could impact cash flow available for other strategic uses.

WDC 10-Q Quarterly Report Q3 FY2017 — Revenue, Net Income, EPS

Summary

Western Digital Corporation (WDC) reported significant year-over-year revenue growth in its third quarter and the first nine months of fiscal 2017, primarily driven by the acquisition of SanDisk. Revenue for the three months ended March 31, 2017, increased by 65% to $4.65 billion, and for the nine months ended March 31, 2017, it rose by 50% to $14.25 billion. Despite the revenue surge, net income for the third quarter of $248 million was up significantly from $74 million in the prior year, but net income for the nine-month period significantly decreased from $608 million to $117 million. This decline in the nine-month period is largely attributable to the integration costs and debt financing related to the SanDisk acquisition, as well as specific tax items. The company's balance sheet shows a reduction in cash and cash equivalents, and an increase in total assets, largely due to the acquisition, while liabilities also remain substantial due to increased debt.

Financial Highlights

57 data points

Beta

Revenue

$4.65B

0.3% Gross Margin

Net Income

$248.00M

0.1% Net Margin

EPS (Diluted)

$0.83

Total Assets

$29.45B

Cash & Equivalents

$5.65B

Free Cash Flow

$875.00M

Financial Statements

Beta

Revenue	$4.65B
Cost of Revenue	$3.13B
Gross Profit	$1.52B
SG&A Expenses	$346.00M
Operating Expenses	$998.00M
Operating Income	$525.00M
Interest Expense	$205.00M
Net Income	$248.00M
EPS (Basic)	$0.86
EPS (Diluted)	$0.83
Shares Outstanding (Basic)	289.00M
Shares Outstanding (Diluted)	299.00M

Key Highlights

1Significant revenue growth driven by SanDisk acquisition: Q3 revenue up 65% YoY, nine-month revenue up 50% YoY.
2Third-quarter net income substantially increased to $248 million from $74 million YoY.
3Nine-month net income decreased significantly to $117 million from $608 million YoY, impacted by acquisition-related expenses and debt.
4Gross margin improved to 32.8% in Q3 2017 from 26.7% in Q3 2016, benefiting from SanDisk's NAND-flash product margins.
5Operating expenses increased due to SanDisk integration, with R&D and SG&A showing significant YoY growth.
6Cash and cash equivalents decreased from $8.15 billion to $5.65 billion, while total debt remained high at $13.08 billion.
7Company generated positive cash flow from operations of $2.5 billion for the nine months ended March 31, 2017.

WESTERN DIGITAL CORP Quarterly Report for Q3 Ended Mar 31, 2017

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions