Western Digital Corporation (WDC), which trades on New York Stock Exchange, on Tuesday announced financial results for its fiscal 2010 second quarter ended December 31, 2010. John Coyne, the company's president and CEO, was quoted in a written statement accompanying the financial announcement:
We are pleased to deliver better-than-expected revenues, profitability and gross margin in the December quarter, reflecting solid execution and an improvement in hard drive industry conditions compared with the prior two quarters.
Western Digital reported revenue of $2.475 billion. Hard drive unit shipments rose five percent to 52.2 million and net income for the quarter was $225 million, or $0.96 per share. This compares to the year-ago quarter when the company reported revenue of $2.619 billion based on 49.5 million hard drive units, resulting in net income and earnings per share of $429 million and $1.85, respectively.
WD generated $505 million in cash from operations during the December quarter, ending with total cash and cash equivalents of $3.1 billion. The company expects third-quarter revenue of $2.20 billion to $2.25 billion compared with analysts' expectations of $2.27 billion. However, COO Timothy Leyden warned about excess inventory in a conference call with Wall Street analysts:
Despite a reduction of about 2-3 million hard drives in the PC supply chain, there is still an inventory in excess of 6-8 million units in the PC manufacturers pipeline.
WD also announced they have doubled the capacity of its 2.5-inch enterprise SAS drive and introduced a full size, 3.5-inch version with up to 2TB of capacity.
The second generation S25 drive, pictured on the left, holds up to 600GB of data, while maintaining the 10,000rpm spin speed of the previous model.
It is a new design with three platters, meaning 200GB/platter. Ashok Kumar, analyst for Rodman & Renshaw said:
Apple is early in driving new form factors such as tablets SSDs and similar type of form factors will also be launched for the traditional Windows World that will hurt Western Digital and Seagate.
However the death of hard drives has been reported for past fifteen years. Instead they are getting bigger, faster, and cheaper. All of which make the buyers smile.
Source: Western Digital Corporation