What was the primary driver for the revenue decrease in the third quarter?

The primary driver for the revenue decrease was lower pricing per gigabyte for both flash and hard disk drive (HDD) products. However, this was partially offset by an increase in the volume of flash exabytes sold.

How did the company's profitability change compared to the prior year?

Profitability significantly improved. Net income for the third quarter of fiscal 2021 was $197 million, a substantial increase from $17 million in the same quarter of fiscal 2020. This improvement was driven by higher gross profit, partly due to reduced amortization expenses.

What is the status of the company's debt and dividend policy?

The company continues to focus on debt reduction, making voluntary prepayments on its Term Loan B-4. The quarterly cash dividend, which was suspended in April 2020, has not been reinstated, as the company is prioritizing reinvestment in the business and deleveraging efforts. The dividend policy will be re-evaluated as the leverage ratio improves.

Are there any significant risks or uncertainties highlighted in the filing?

The filing refers to risks and uncertainties detailed in the company's Annual Report on Form 10-K for the fiscal year ended July 3, 2020. A notable point mentioned is the ongoing COVID-19 pandemic, which has impacted operations through higher logistics costs and supply chain constraints, and the company continues to monitor its effects on demand and operations.

WDC 10-Q Filed May 6, 2021

Summary

Western Digital Corporation (WDC) reported its fiscal third quarter 2021 financial results for the period ending April 2, 2021. The company saw a slight decrease in revenue of 1% year-over-year to $4.14 billion, primarily driven by lower pricing per gigabyte for both HDD and flash products, though this was partially offset by an increase in flash exabyte volume. Net income saw a significant improvement, rising to $197 million from $17 million in the prior year's quarter. Key operational highlights include increased revenue in Client Devices and Client Solutions segments, while Data Center Devices and Solutions experienced a decline. The company also noted positive indications for 5G ramp and gaming growth, expecting revenue to increase through calendar 2021. WDC continues to manage its debt, with further prepayments made on its Term Loan B-4, and has suspended its dividend to reinvest in the business and support deleveraging efforts.

Key Highlights

1Revenue for the third quarter decreased 1% year-over-year to $4.14 billion, impacted by lower per-gigabyte pricing for both HDD and flash, partially offset by increased flash exabyte volume.
2Net income for the quarter dramatically increased to $197 million, up from $17 million in the same period last year, indicating improved profitability.
3Client Devices revenue grew 10% year-over-year, driven by higher flash volumes and strong demand in PCs and gaming consoles.
4Data Center Devices and Solutions revenue declined 19% year-over-year due to lower volumes (primarily HDD) and reduced pricing per gigabyte.
5The company reported a significant increase in gross profit ($86 million) and gross margin (approximately 2 percentage points) for the quarter, largely due to lower amortization expenses on acquired intangible assets.
6WDC made voluntary prepayments of $150 million on its Term Loan B-4 during the quarter, continuing its debt reduction strategy.
7The company has suspended its dividend to reinvest in the business and support deleveraging efforts, with no share repurchases made during the nine months ended April 2, 2021.

WESTERN DIGITAL CORP Quarterly Report for Q3 Ended Apr 2, 2021

Summary

Key Highlights

Frequently Asked Questions