TDK: Fiscal 4Q08 Financial Results

Here are the financial results and projections of TDK Corp. for its 4Q and fiscal year ending in March 31.

In its storage segment, the Japanese company is counting more on its disk head segment than on its tape and optical media business.
TDK has acquired disk head manufacturer Alps Electric in 2007 for $315 million and is engaged in the acquisition of the suspension assemblies of Magnecomp for $123 million. For analyst TrendFocus, SAE/TDK is the worldwide leader of the HDD recording head market with a 47.8% share in the first three month of calendar year 1008.
Imation has acquired the TDK brand name and got the entire sales activity for all TDK branded recording products, also in 2007, for $300 million, of which only $20 million in cash and $280 million in stock, allowing TDK to become the largest shareholder of its historic rival, with a 16.6% stake.
Furthermore, TDK has formed a 60%-40% joint venture in Taiwan with partner Power Quotient International for flash devices at the end of last year .

Consolidated financial results of TDK Corp. 

Revenues for the recording media business

Revenues for the disk head business

Commenting these results, here is what said Seiji Enami, Director, General Manager, Finance & Accounting Department, concerning the disk head and the recording media businesses.

Recording devices
"Now the main features of our results. The first feature was a large increase in head volumes in recording devices and a large increase in the share of perpendicular magnetic recording-based products in our product mix."
"Sales in the recording devices sector increased ¥29.9 billion, or 9.8%, to ¥334.7 billion, and accounted for 38.6% of total sales. TDK’s HDD head sales tracked higher production of HDDs for PC applications. The ‘other heads’ category, which is now included under ‘other’ in this sector, saw sales fall due to the withdrawal from some products. We have previously talked about our acquisition of an HDD suspension assemblies manufacturer. Sales of this manufacturer are included under ‘other,’ which is why we renamed this category. Overall, HDD heads accounted for 93% of total sector sales and sales were up 6% year on year. Other heads, which as I’ve just said includes HDD suspension assemblies and the previously classified ‘other heads,’ accounted for the remaining 7% and rose 98%."

Recording media
"Furthermore, the recording media segment saw sales drop substantially following the transfer of the TDK brand product sales business for recording media to Imation Corp. In return though, TDK recorded a gain on transfer."
"The recording media segment, meanwhile, saw net sales fall ¥55.0 billion, or 53.3%, year on year to ¥48.2 billion. This segment accounted for 5.6% of total sales."
"Sales in the recording media segment fell sharply due to the transfer of the TDK brand recording media sales business to Imation Corp. As a result, there was a large change in the makeup of recording media segment sales. Audiotape sales declined 28% and represented 7% of segment sales. Videotape sales were down 59% and accounted for 15% of segment sales. Optical media sales dropped 68% and accounted for 37% of segment sales. Blu-ray Disc sales are increasing gradually as the market comes of age for this media. Other products, including tape-based data storage media for computers, saw sales decline 25% and account for 41% of segment sales. Sales of LTO-standard (Linear Tape-Open) tape-based data storage media for computers rose."
"Conversely, while the recording media segment recorded a ¥55.0 billion drop in net sales, its operating income improved ¥13.4 billion from a loss in the previous fiscal year."
"The recording media segment posted an improvement in operating income of ¥13.4 billion, but it recorded a loss of ¥4.1 billion if the ¥15.3 billion gain on transfer is excluded."