Western Digital Maintains Position of the World's Largest HDD Maker

From X-bit Labs: Western Digital has maintained its lead on the market of hard disk drives (HDDs) in the most recent quarter and outsold its arch-rival Seagate by 2.9 million HDDs. Nonetheless, revenues of Seagate are still substantially higher compared to WD thanks to better sales of enterprise-oriented hard drives.

For the fourth quarter of fiscal 2010 ended July 2, 2010, WD's revenue totaled $2.4 billion, hard drive unit shipments were 49.7 million and net income was $265 million, or $1.13 per share. The quarterly results included $27 million of expense related to litigation settlements. In the year-ago quarter, the company posted revenue of $1.9 billion, shipped 40.0 million hard drives, and reported net income and earnings per share of $196 million and $0.86, respectively. This included $5 million of income from the resolution of restructuring accruals and an $18 million gain on the sale of the company’s substrate manufacturing facility in Sarawak, Malaysia.

"Despite softer than anticipated June quarter demand, fiscal year 2010 was another year of significant growth and profitability for Western Digital. The long-term demand for low-cost, high-volume storage driven by the proliferation of data and content-hungry consumer and commercial devices remains strong,” said John Coyne, president and chief executive officer.

Seagate Technology said that in its fourth quarter FY2010 ended July 2, 2010 it sold 46.8 million disk drive units, thus, widening the gap with WD to 2.9 million units per quarter. The company reported revenue of $2.66 billion, gross margin of 27.4%, net income of $379 million and diluted earnings per share of $0.76. The financial results for the quarter include $6 million of purchased intangibles amortization expense, $16 million of restructuring charges, $3 million expense (Other income/expense) for the May 2010 termination of Seagate's revolving credit facility offset by a $6 million recovery of previously impaired long-lived assets and a $50 million income tax benefit due principally to valuation allowance adjustments related to deferred tax assets. The aggregate impact of these items was a $31 million increase to net income or approximately $0.06 per diluted share.

"Specific to our fiscal fourth quarter, two of our key assumptions entering the quarter did not materialize as expected and impacted our financial results – macro-economic stability and pricing reflective of balanced supply and demand. Industry demand in the fiscal fourth quarter was at the low end of our expectations due primarily to issues emanating from the debt crisis in Europe and slowing consumer spending especially in the U.S. and Europe. The lower unit shipments and unfavorable pricing at some key capacity points impacted Seagate's ability to deliver revenue and earnings for the quarter within our target range. Despite these factors, Seagate reported the highest operating results for a June quarter in the company's history," said Steve Luczo, said Seagate's chief exec, president and chairman.

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