RealTime IT News

Western Digital Q3 Revenues Fall

Western Digital Corp. (NYSE: WDC) reported declining third quarter fiscal 2011 revenues this week.

Third quarter fiscal 2011 revenues for the storage vendor were reported at $2.25 billion, a decline from of 15 percent from the $2.64 billion reported for the third quarter of 2010. Net Income was reported at $146 million, a decline from the $400 million reported in 2010.

Among the multiple factors impacting Western Digital's business is the fact that the average hard drive selling price was approximately $45 per unit, down $6 from the year ago quarter. John Coyne, CEO and President of Western Digital (WD) noted during the company's earnings call that industry shipments came in at 160 million units for the March quarter, slightly above WD's original expectation of 155 million units.

"Customers accelerated product purchases in the last 3 weeks the quarter, due to supply concerns as a result of the Japanese earthquake," Coyne said. "Analyzing the effects of the events in Japan, on the technology industry generally, there were, and remain a number of supply chain challenges, which are impacting both demand and supply visibility in the June quarter and beyond."

Coyne added that with the support of suppliers, WD has mitigated the initial impact on their ability to support pre-earthquake customer share awards for the June quarter.

"We have now turned our attention to responding to customer upside requests for this quarter, which we believe are driven by unresolved supply chain issues at competitors and to fully supporting customer needs in the September quarter," Coyne said. "We believe end customer demand for the June quarter in all markets for HDDs is tracking to seasonally normal patterns."

That said, Coyne said that there is uncertainty around the ability of WD's customers and the HDD industry to fully satisfy demand due to supply chain challenges.

"In uncertain times like these, we believe a highly flexible and responsive WD business model is especially well-equipped to perform and deliver value to our customers and shareholders," Coyne said.

The third quarter of 2011 was a busy one for WD overall. The company introduced a new 6 Terabyte hard drive platform, called the My Book Studio Edition II.

WD also announced its intention to acquire Hitachi's storage business (HGST) for $4.3 billion. Rival storage vendor Seagate is also on the move, announcing the acquisition of Samsung's HDD business for $1.37 billion.

Coyne does not expect that the Seagate deal will have an impact on how WD's deal for Hitachi will be viewed by regulators

"We developed our transaction based on our belief that it will enhance our ability to provide value to customers, through enhancement of the basic technology that's required to continue to deliver a high-quality, high reliability product portfolio," Coyne said. "The scale of the combined operations generates cost leverage and efficiencies, which we intend to share with our customers."

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.