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WD: Fiscal 2Q15 Financial Results

Business slightly down, like WW HDD market

(in $ million) 2Q14 2Q15 6 mo. 14 6 mo. 15
Revenue 3,972 3,888 7,776 7,831
Growth   -2%   1%
Net income (loss) 430 460 925 883

Western Digital Corp. reported revenue of $3.9 billion and net income of $460 million, or $1.93 per share, for its second fiscal quarter ended Jan. 2, 2015.

On a non-GAAP basis, net income was $539 million or $2.26 per share. In the year-ago quarter, the company reported revenue of $4.0 billion and net income of $430 million, or $1.77 per share. Non-GAAP net income in the year-ago quarter was $532 million, or $2.19 per share.

The company generated $243 million in cash from operations during the December quarter, net of the Seagate arbitration award payment of $773 million, ending with total cash and cash equivalents of $4.9 billion.

During the December quarter, the company utilized $309 million to repurchase 3.2 million shares of common stock. On November 4, the company declared a $0.40 per common-share dividend, which was paid on January 15.

We delivered strong financial results in the December quarter, with better-than-anticipated revenues, gross margins, and earnings,” said Steve Milligan, president and CEO. “The diversified nature of our business and solid execution by our HGST and WD subsidiaries are enabling us to consistently deliver strong financial performance. Also, I am encouraged by the market’s response to our strategic growth initiatives, which we believe position the company to thrive in the evolving storage ecosystem.”

Comments

CEO Steve Milligan is "pleased" with the financial results of his company for the December quarter, but WD business - like the worldwide HDD market - is flat since several quarters: revenue are down 1% Q/Q and 2% Y/Y for the quarter and the number of HDDs shipped decreased 5% and 3% for the same two periods, respectively.

Trendfocus confirmed that Q/Q the worldwide market of HDDs  or TAM was down 4%% from 147 million to 141 million units sold, the three manufacturers registering lower volume: Seagate -4.4%, Toshiba -0.3% and WD at -5.7% losing market shares sequentially from 44.0% to 43.4%, this time according to WD figures.

Next march quarter is not going to be better. WD expects revenue to be in a range of $3.6 billion (-8% Q/Q) to $3.7 billion (-5%) and TAM continuing to decline, from 141 million to mid-130 million range.

Milligan commented:" The demand outlook for the March quarter reflects a normal seasonal decline with moderation in client, branded products and performance enterprise with stable demand and capacity enterprise."

Net income was much higher for Seagate primarily because it got a73 million from WD related to an arbitration award in the December quarter.

Looking at the WD's HDD line for the quarter, there was a high sequential decline for desktop and  notebook units and an increase for enterprise and branded products.

Flash platform solution business maintained its growth trajectory in the quarter delivering revenue of $187 million, up 20% Y/Y.

 
 
Volume and HDD Share
WD 2FQ15
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unit volume excludes WD TV Media Players without hard drives, WD Livewire, SSD and media

 

WD's HDDs
(units in million)
Enterprise Desktop Notebook CE Branded Exabyte
Shipped
Average
GB/drive
ASP
2Q13 6.6 17.7 21.3 6.5 7.1 47.6 804 $62
3Q13 7.2 18.4 21.5 6.5 6.5 48.4 807 $61
4Q13 7.9 16.2 24.0 6.5 5.3 47.7 797 $60
1Q14 7.8 17.3 22.9 8.5 6.1 50.8 811 $58
2Q14 7.8 16.8 22.7 8.8 7.0 55.1 874 $60
3Q14 7.1 16.6 21.8 8.6 6.3 53.6 888 $58
4Q14 7.1 16.2 22.9 10.9 6.0 55.2 875 $56
1Q15 7.8 16.3 23.4 10.5 6.8 64.9 1,002 $58
2Q15  8.0  15.4  21.2 9.3  7.2 66.4 1,087  $60

 

Seagate vs.WD for 2FQ15 (units in million)

  Seagate WD % in favor
of WD
Revenue* 3,696 3,888 5%
Net income* 933 460 11%
Notebook 19.7 21.2  8%
Desktop 16.0 15.4  -4%
Branded 6.0 7.2  17%
CE 6.1 9.3  53%
Enterprise 9.1 8.0  -12%
Total HDDs 56.9 61.0  7%
Market share 40.0% 43.4%  3.4%
Average GB/drive 1,077 1,087 1%
EB shipped 61.3 66.4  8%
ASP $61 $60  -2%

* in $ million

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