Western Digital Corporation (WDC): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Western Digital reported mixed third-quarter results wherein the bottom line came ahead of the Zacks Consensus Estimate but the top line missed the same. The company's guidance remained tepid citing seasonal factors. Nonetheless, the secular growth of digital data and growing exposure to the small and medium business space are long-term positives. We remain encouraged by the company's launch of a string of storage devices under the mobile and cloud segment. However, continued investment in product innovation could result in flattish margins in the near term. Moreover, the recent acquisitions will have a dilutive effect on the company's bottom line. Thus, we reiterate our Neutral recommendation on Western Digital.

Overview:

Western Digital Corporation (WDC), headquartered in Irvine, CA, is one of the largest hard disk drive (HDD) producers in the U.S. The company designs, develops, manufactures and markets a broad range of HDDs used in desktop PCs, servers, network-attached storage devices, video game consoles, digital video recorders and a host of other consumer electronic devices.

The company markets its products under HGST, WD and G-Technology brands. The company operates through two independent subsidiaries HGST and WD.

Western Digital sells hard drives of 3.5-inch and 2.5-inch form factors with storage capacities ranging from 30 gigabytes (GB) to 4 terabytes (TB). The company's solid-state drives (SSDs) include 2.5-inch, mSATA, MO-297 and CompactFlash form factors, with storage capacities ranging from 128 megabytes (MB) to 400 GB. The company also provides WD software applications, such as WD Photos and WD 2GO to the mobile computing market. The company's solutions are compatible with Apple's iOS, Google's Android and Microsoft's Windows Platforms.

Western Digital has introduced hybrid dual drive storage solution WD Black2 featuring a 2.5-inch 120 GB SSD and 1 TB HDD. It also provides 20-nm architecture with quad channel NAND processing and 8 GB space that provide a powerful dual drive solution. This storage device is expected to enhance the overall drive capacity, reliability and performance. It offloads data usage from the SSD to the HDD, which increases SSD's life.

The company markets its products and solutions through original equipment manufacturers (OEMs), distributors and retailers. In 2013, the company generated 54.0% of revenues from Asia, 20.0% from Europe Middle East Africa (EMEA) and the remaining 26.0% from the Americas.

The company competes with other hard drive manufacturers with offerings in the desktop, notebook, enterprise computer, consumer electronic devices and external storage markets. Western Digital mainly competes with companies like Fujitsu Limited, Hitachi Global Storage Technologies, Samsung Electronics Co. Ltd., Seagate Technology and Toshiba Corporation.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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Referenced Stocks: GB , WDC

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