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
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
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
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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