Summary
Western Digital Corporation (WDC) reported a net income of $62 million for the three months ended January 1, 2021, a significant improvement from a net loss of $139 million in the prior year's comparable quarter. This turnaround was driven by a 7% decrease in revenue to $3,943 million, but a more substantial 10% decrease in the cost of revenue, leading to a 3% increase in gross margin to 24.3%. The company experienced strong growth in its Client Devices segment, up 19%, attributed to increased demand for consumer electronics amid work-from-home trends. However, the Data Center Devices and Solutions segment saw a substantial 46% decline, influenced by ongoing cloud digestion and China shipment restrictions. The company maintained compliance with its financial covenants and ended the period with $2,956 million in cash and cash equivalents.
Financial Highlights
56 data points| Revenue | $4.14B |
| Cost of Revenue | $3.05B |
| Gross Profit | $1.09B |
| SG&A Expenses | $287.00M |
| Operating Expenses | $774.00M |
| Operating Income | $317.00M |
| Interest Expense | $81.00M |
| Net Income | $197.00M |
| EPS (Basic) | $0.64 |
| EPS (Diluted) | $0.63 |
| Shares Outstanding (Basic) | 306.00M |
| Shares Outstanding (Diluted) | 313.00M |
Key Highlights
- 1Reported a net income of $62 million for the quarter, compared to a net loss of $139 million in the prior year's comparable quarter.
- 2Revenue decreased by 7% to $3,943 million, primarily due to lower pricing per gigabyte and reduced HDD exabyte volume in Data Center segments.
- 3Gross profit increased by $25 million, and gross margin improved by approximately 3 percentage points to 24.3%, aided by lower cost of revenue and insurance recovery related to a past power outage incident.
- 4Client Devices revenue saw strong growth of 19%, driven by increased demand for flash-based SSDs for PC applications due to remote work and learning trends.
- 5Data Center Devices and Solutions revenue declined significantly by 46%, attributed to cloud storage digestion and shipment restrictions in China.
- 6Operating expenses decreased by 9% due to lower R&D and SG&A costs, partly influenced by COVID-19 related travel restrictions and event cancellations.
- 7Maintained compliance with financial covenants and ended the period with $2,956 million in cash and cash equivalents, down from $3,048 million at the start of the fiscal year.