Western Digital: Fiscal 4Q17 Financial Results

Comments

The manufacturer realizes what is expected: sales of $4.8 billion, up 39% Y/Y (with SanDisk) and 4% Q/Q.

Revenue for next quarter is expected to be to be approximately $5.1 billion, which would represent 8% Y/Y or 5% Q/Q growth.

Expectations continue to be revenue of $19 billion for current fiscal year compared to $13 billion for FY16 or +46%.

Notably following the integration of SanDisk, headcount diminished quarterly from 71,245 to 67,629.

In a worldwide decreasing HDD market, the firm sold 39.3 million devices, up 1% Q/Q - but we are far from the record of 64.7 million units in 1Q15 -, for a total of 81.2EB shipped corresponding to an increase of 9% quarterly.

WD is largely beating Seagate in all the figures but HDD ASP ($63 vs. $64.)

Concerning the war with Toshiba, WD's CEO commented: "Our goal has always been to protect and preserve the health and future of our successful joint ventures. We and our subsidiaries have operated the JVs with Toshiba for the last 17 years. It is a partnership that has been highly successful for both parties and for Japan. As you may have seen in media reports, Mark and I were in Japan last week to continue our dialog with Toshiba and its stakeholders. Our discussions were constructive, and we will continue to work to seek a solution that is in the best interest of all parties."

Abstracts of the earnings call transcript:

Mike Cordano, President and COO:
"Results from our NAND flash products were strong in the midst of a continued constrained supply environment, and HDD results were largely within our expectations. We made further progress towards our 3D NAND technology transition objectives, and our operational advancements remained on track.
" (...) our results since the close of the SanDisk acquisition last year illustrate the power of our platform. Our client devices business grew by 36% year-over-year on a pro forma basis, despite the PC market being slightly weaker than expected in the quarter.
"Shipments of our 10TB helium drives increased significantly on a sequential basis as our industry-leading product made further inroads in hyperscale data centers.
"On a cumulative basis, since the launch of our helium platform four years ago, we have shipped more than 18 million helium drives. Qualification activities for our 12TB helium drives began at key hyperscale and OEM customers in the June quarter.
"For the nearline drive market, our expectation for the long-term industry exabyte growth at the 40% annual rate remains unchanged. Given certain industry-wide component shortages, we now estimate the industry exabyte growth to be approximately 30% for calendar 2017. However, we expect our own growth rate will be approximately 40% given the strong adoption of our nearline offerings.
"Development work on BiCS4, our recently announced 96-layer 3D NAND technology, is ongoing and we expect to begin sampling in calendar 2017 with meaningful production volumes in calendar 2018.
"From a NAND industry supply standpoint, our estimate for bit growth rate for calendar 2017 remains at the low end of our long-term industry outlook of 35% to 45%, and for calendar 2018, somewhat higher than in 2017."

Mark Long, CFO:
"Revenue in data center devices and solutions was $1.4 billion, client devices was $2.4 billion, and client solutions was $1 billion.
"Our June quarter revenue for data center devices and solutions increased 7% year-over-year. We saw a sustained strength in capacity enterprise hard drives and enterprise SSDs, offset by a decline in performance enterprise hard drives. Client devices revenue for the June quarter increased 36% year-over-year, primarily driven by significant growth in mobility and client SSDs.
"Client solutions revenue for the June quarter increased 14% year-over-year driven mostly by our valuable global retail brands in removable and other flash-based products."

Volume and HDD Share

Seagate vs. WD for 4FQ17
(revenue and net income in $ million, units in million)