WD: Fiscal 3Q10 Financial Results

(in US$ millions)	3Q09	3Q010	9 mo. 09	9 mo. 10
Revenues	1,592	2,641	5,524	7,468
*Growth*		66%		*35%*
Net income (loss)	50	400	374	1,168

Western Digital Corp. reported revenue of $2.6 billion, hard drive shipments of 51.1 million units and net income of $400 million, or $1.71 per share, for its third fiscal quarter ended Apr. 2, 2010. In the year-ago quarter, the company reported revenue of $1.6 billion, hard drive shipments of 31.6 million units, and net income of $50 million, or $0.22 per share.

The company generated $588 million in cash from operations during the third quarter, ending with total cash and cash equivalents of $2.8 billion.

John Coyne, president and chief executive officer, said: "With market demand stronger than anticipated in the March quarter, our large-scale vertical integration, agile business model and product breadth allowed us to respond to this upside opportunity and again grow our share of the overall hard drive market.

"We believe that 2010 will continue to be a strong year for digital storage," said Coyne. "We will maintain our focus on facilitating our customers’ growth and making them successful while at the same time achieving sustained profitability for WD."

Comments

Historic event in the worldwide HDD industry: for the first time since many many years, a company sold more disk drives than Seagate during a quarter, 51.1 million for WD compared to 50.3 million for Seagate. But Seagate continues to remain the number one in revenues with 3,049 million, 15% more than WD, mainly because Seagate sells in average more expensive units for the enterprise market. Seagate also recorded a higher net income, $518 million vs. $400 million.

Abstracts of the earnings call transcript:

Tim Leyden, CFO:

"Hard drive shipments totaled 51.1 million units, up 62% from the prior year period and 3% sequentially. Revenue from sales of WD TV Media Players and solid-state drives totaled approximately $46 million, up 48% from the prior year and essentially flat with the December quarter. Average hard drive selling price was approximately $51 per unit, up $1 from the year ago quarter and down $1 from the December quarter. Growth in emerging markets and recovering commercial segment let the desktop growth being stronger than expected.

"Pricing remains stable as a result of the unexpectedly strong demand. We shipped 19.8 million mobile drives in the March quarter, compared to 10.1 in the year ago quarter and 21.2 million in the December quarter.

"During the March quarter, we shipped 4.6 million drives into the DVR market compared to 3.5 million in the year ago quarter and 4.1 million in the December quarter. Our strong product line up led to revenue gains in both our OEM and channel businesses. Revenue from sales of our branded products including WD TV was $467 million, up 36% from $343 million from the year ago quarter and down 18% sequentially from $569 million in the December quarter, reflecting the typical seasonality of the retail market.

"Revenue by channel was 49% OEM, 33% distribution and 18% branded products in the March quarter, compared with 48%, 30%, and 22% in both the year ago and December quarters.

"The Asian market showed continued strength increasing to 52% of revenue in the March quarter from 46% in the year ago quarter and 50% in the December quarter. The Americas and European regions performed as expected at 24% for the Americas and 24% for Europe in the March quarter, compared to 26% and 28% in the year ago quarter and 25% and 25% in the December quarter.

"Historically, June quarter demand has been slight to moderately down when compared to March volumes and we expect that seasonality pattern to continue.

"We expect current quarter revenue for WD to be in a range from $2.475 billion to $2.575 billion."