Business News: Western Digital share jumps. So, the profit was so great..
Shares of Western Digital traded higher at the end of Thursday on the back of better-than-expected financial results for the disk drive and flash memory firm’s fiscal third quarter.
Western Digital (ticker: WDC) posted revenue of $ 4.1 billion for the quarter ended March 31, down 1% from a year ago, but ahead of the indicative $ 3.8 billion to $ 4.05 billion range. Non-GAAP earnings were $ 1.02 per share, well above the company’s forecasts of 55 cents to 75 cents.
Investors responded warmly, with Western Digital’s shares gaining nearly 10% on overtime trading. The company, which manufactures hard drives and data storage products used in personal computers and servers, said it was buoyed by huge retail demand for desktop and notebook computers during the quarter.
“The team has delivered solid results this quarter, especially as we continue to adapt our business and technology portfolio to take advantage of the immense opportunities in the storage industry,” said David Goeckeler (pictured), chief executive officer of Western Digital. “During the quarter, we gained strength in the retail sector and also achieved our goal of completing the qualification of our energy-supporting hard drives and second-generation enterprise SSD products with some of the largest data center operators in the world”.
By breaking down revenue by business segment, Western Digital said its client device unit was the largest it earned with sales exceeding $ 2.1 billion. Client solutions grossed $ 1 billion, while data center devices and solutions added $ 807 million.
Data center devices posted revenue of $ 1.2 billion, down 19%, although the company said it had sequential growth with its NVMe enterprise solid-state drives (Express Non-Volatile Memory, a standard connection for some storage devices) to an unspecified “cloud titan”. (This is apparently a reference to one of the big three cloud companies: Amazon, Microsoft, or Google.) The company added that “Western Digital’s energy-supported hard drive qualifications have also been completed with nearly all cloud and enterprise customers. , including all cloud titans. ” The company said its customer solutions segment had revenue of $ 888 million, up 8%, driven by the strength of its retail products.
In an interview with Barron’s, Western Digital CEO David Goeckeler said flash memory device prices continue to strengthen and says Western has been able to raise the prices of consumer products sold through resellers and distributors weekly and , in some cases, daily. “We are able to react to market changes and move supply to where there are greater market opportunities,” he says.
Goeckeler declined to provide a long-term perspective for memory pricing, but said the company continues to see “an environment of high demand”. He adds that supply constraints aren’t really an issue for the company, although the company uses microcontrollers and other parts that are in short supply. “We’re going through all of this,” he says.
The company said it generated $ 425 million in cash from operations during the quarter. For the third quarter, Western Digital said, revenue is expected to range between $ 3.58 billion and $ 4.05 billion, versus Wall Street’s forecast of $ 3.88 billion.