Western Digital reported better-than-expected fourth-quarter fiscal
2014 results. However, year-over-year comparisons were unfavorable
primarily due to a fall in HDD prices and soft demand from the
enterprise segment. The company provided a tepid revenue and
earnings guidance citing seasonal factors. Nonetheless, the shift
toward non-PC applications, secular growth of digital data, growing
exposure to the SMB segment and pending MOFCOM approval are
long-term positives. Additionally, modest growth in TAM and higher
demand for storage are expected to result in a positive earnings
surprise in the upcoming quarter. Although strategic acquisitions
in the SSD segment are expected to expand its offerings,
competition from Seagate and SanDisk cannot be discounted. Thus, we
reiterate our Neutral recommendation in the stock.
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 6
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
The company markets its products and solutions through original
equipment manufacturers (OEMs), distributors and retailers. In
FY14, the company generated 54% of revenues from Asia, 21% from
Europe Middle East Africa (EMEA) and the remaining 25% from the
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.
Western Digital Corporation (WDC): Read the Full
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