Summary
Western Digital Corporation (WDC) reported a net loss of $581 million for the third quarter of fiscal year 2019, a significant downturn from the $61 million net income in the same period last year. This loss was driven by a substantial 26.7% decrease in net revenue, falling to $3.7 billion from $5.0 billion year-over-year. The decline in revenue is attributed to lower average selling prices (ASPs) for flash-based products and reduced sales of Hard Disk Drives (HDDs), impacting all key business segments: Client Devices, Data Center Devices & Solutions, and Client Solutions. The company is experiencing pricing pressure in the flash market due to increased supply and decreased demand, leading to a significant drop in gross profit margin to 15.8% from 38.4% in the prior year. Management is implementing cost-saving measures, including workforce reductions and facility closures, aiming for an annualized cost reduction of $800 million. Despite the challenging quarter, the company maintains a strong liquidity position with substantial cash on hand and an available credit facility, and believes these resources are sufficient to meet its obligations for at least the next twelve months.
Financial Highlights
57 data points| Revenue | $3.67B |
| Cost of Revenue | $3.10B |
| Gross Profit | $579.00M |
| SG&A Expenses | $353.00M |
| Operating Expenses | $973.00M |
| Operating Income | -$394.00M |
| Interest Expense | $118.00M |
| Net Income | -$581.00M |
| EPS (Basic) | $-1.99 |
| EPS (Diluted) | $-1.99 |
| Shares Outstanding (Basic) | 292.00M |
| Shares Outstanding (Diluted) | 292.00M |
Key Highlights
- 1Net loss of $581 million for Q3 FY19, compared to a net income of $61 million in Q3 FY18.
- 2Revenue decreased by 26.7% to $3.7 billion from $5.0 billion year-over-year, driven by lower ASPs for flash products and reduced HDD sales.
- 3Gross profit margin significantly declined to 15.8% from 38.4% due to pricing pressures and increased cost of revenue, including underutilization charges related to Flash Ventures.
- 4Operating expenses saw a slight decrease, with R&D and SG&A expenses reduced due to cost-saving actions and lower variable compensation.
- 5Company is implementing cost reduction initiatives, targeting $800 million in annualized savings.
- 6Cash and cash equivalents stood at $3.7 billion, and the company has significant liquidity from operations and an available credit facility.
- 7The company is facing significant challenges in the flash memory market due to supply/demand imbalances and declining ASPs.