8-KRegulation FD

WESTERN DIGITAL CORP 8-K Report, Regulation FD Disclosure (May 21, 2007)

Filed May 21, 2007For Securities:WDC

Summary

Western Digital Corporation (WDC) filed an 8-K on May 21, 2007, providing investors with an update on industry conditions and company-specific initiatives. The report indicates that demand and pricing in the hard drive markets are experiencing their usual seasonal softness in the current June quarter, with performance expected to be driven by business in the latter part of the quarter. Importantly, channel inventory levels for both the industry and WDC remain within the company's stated manageable range of 4 to 6 weeks, suggesting a balanced supply-demand environment. In terms of strategic investments, WDC has finalized plans to expand its head wafer fabrication capacity. This expansion is projected to cost approximately $200 million in fiscal year 2008 and $100 million in each of the following two fiscal years, totaling about $400 million over three years. These investments are incremental to normal capital expenditures and represent a revised, more focused approach compared to previous indications of potentially needing a new facility and a higher expenditure. Additionally, the company announced the shipment of its new 250 GB WD Scorpio™ 2.5-inch Serial ATA hard drive for notebook PCs, featuring perpendicular magnetic recording (PMR) technology for high capacity and proprietary enhancements for quiet operation, lower power consumption, and cooler temperatures.

Key Highlights

  • 1Demand and pricing in the hard drive market are seasonally soft for the June quarter.
  • 2June quarter financial performance will largely depend on business dynamics in the latter part of the quarter.
  • 3Industry and WDC channel inventory levels are within the manageable range of 4 to 6 weeks.
  • 4WDC plans to invest approximately $400 million over three fiscal years (FY2008-FY2010) to expand head wafer fabrication capacity.
  • 5The head wafer fabrication capacity expansion plan is revised from prior discussions, focusing on existing facilities and a lower total cost.
  • 6WDC has begun shipping its new 250 GB WD Scorpio™ 2.5-inch Serial ATA hard drive for notebooks.
  • 7The new Scorpio drive utilizes PMR technology to achieve industry-leading capacity in its form factor and includes proprietary features for performance and efficiency.

Frequently Asked Questions

Western Digital is experiencing seasonally soft demand and pricing in the hard drive markets for the current June quarter. The company expects the business performance in the remainder of the quarter to be crucial for its overall financial results for the period.

No, the report indicates that channel inventory for the industry and for Western Digital is within the company's long-stated manageable range of 4 to 6 weeks, suggesting a balanced supply and demand situation.

WDC has finalized plans to expand its head wafer fabrication capacity. The company anticipates spending approximately $200 million in fiscal year 2008 and $100 million in each of fiscal years 2009 and 2010, for a total of about $400 million over three years. These investments will be made at existing facilities and are incremental to normal capital expenditures.

Western Digital announced it is now shipping its new 250 GB WD Scorpio™ 2.5-inch Serial ATA hard drive. This drive is designed for notebook PCs and uses perpendicular magnetic recording (PMR) technology to achieve high capacity, along with proprietary features focused on quiet operation, reduced power consumption, and cooler temperatures.