Western Digital Corporation (WDC)

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Western Digital (WDC)

Q1 2013 Earnings Call

October 22, 2012 5:00 pm ET


Robert Blair - Executive Officer of Investor Relations

John F. Coyne - Chief Executive Officer, Executive Director and Chairman of Executive Committee

Stephen D. Milligan - President

Wolfgang U. Nickl - Chief Financial Officer, Principal Accounting Officer and Executive Vice President


Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division

Robert Cihra - Evercore Partners Inc., Research Division

Steven Bryant Fox - Cross Research LLC

Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division

Bill C. Shope - Goldman Sachs Group Inc., Research Division

Nehal Sushil Chokshi - Technology Insights Research LLC

Keith F. Bachman - BMO Capital Markets U.S.

Kathryn L. Huberty - Morgan Stanley, Research Division

Sherri Scribner - Deutsche Bank AG, Research Division

Benjamin A. Reitzes - Barclays Capital, Research Division

Mark A Moskowitz - JP Morgan Chase & Co, Research Division

Mark S. Miller - Noble Financial Group, Inc., Research Division



Good afternoon, and thank you for standing by. Welcome to Western Digital's First Quarter Financial Results for Fiscal Year 2013. [Operator Instructions] Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. Now I will turn the conference over to your host, Mr. Bob Blair. You may begin.

Robert Blair

Thank you. As we begin, I would like to mention that we will be making forward-looking statements on our comments and in response to your questions concerning growth in the storage industry, our position in the industry, our investment in capital allocation plans, HDD demand for the December quarter and fiscal 2013 and our financial results expectations for the September quarter and fiscal 2013. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including those listed in our 10-K filed with the SEC on August 20, 2012. We undertake no obligation to update our forward-looking statements to reflect new information or events.

In addition, references will be made during this call to non-GAAP financial measures. Reconciliations of the differences between the historical non-GAAP measures that we provide during this call to the comparable GAAP financial measures are included in the investor information summary posted in the Investor Relations section of our website.

The forward-looking guidance we provide during this call excludes certain items such as amortization of intangibles and the dilutive impact of sales of drives to Toshiba in connection with our divestiture transaction. Because the amount of these items is not fully known to us at this time, we are unable to provide guidance for or a reconciliation to the most directly comparable GAAP financial measures. The impact of these excluded items may cause the estimated non-GAAP financial measures to differ materially from the comparable GAAP financial measures.

[Operator Instructions] I also want to note that copies of remarks from today's call will be available on the Investor section of Western Digital's website immediately following the conclusion of this call.

I now turn the call over to Chief Executive Officer John Coyne.

John F. Coyne

Thank you, Bob. Good afternoon, and thank you for joining us today. I have with me our President, Steve Milligan; and our Chief Financial Officer, Wolfgang Nickl.

In this, my last earnings call, I'm happy to report another quarter of strong financial performance, continuing our track record of consistent execution. During my 6-year tenure as CEO, we have experienced and successfully addressed many different challenges and opportunities. Throughout, we have continued to hone our time-tested and flexible business model, delivering outstanding returns and value under varying scenarios. The results include a doubling of market share, a tripling of revenue and a fivefold increase in profits.

I'm proud of this sustained performance by the team, and I'm confident as I pass the leadership of the company to Steve, ably supported by Tim Leyden, Mike Cordano and Wolfgang, that they will continue to build on that momentum.

While the macroeconomic environment is dampening near-term demand, we remain confident in the continued long-term growth in the creation, storage and management of digital content. This is being seen in every aspect of our lives, and monetizing it provides a compelling long-term opportunity for the company.

We have built strong relationships with customers in all of our markets by consistently delighting them with high-quality, reliable products based on superior technology and delivered through the industry's most efficient supply chain. We have developed a tremendously broad product portfolio, great depth and breadth in our people and technology resources and a powerful platform. Western Digital has never been better positioned to succeed as it continues to thrive on change and deliver great value to all its constituents.

I want to take this opportunity to thank our customers, our supply partners and our investors for their support, and I especially want to thank our employees around the world who have consistently delivered such outstanding performance.

With that, I'll turn the call over to Steve Milligan.

Stephen D. Milligan

Thanks, John. We are very pleased to report strong financial results for our September quarter, demonstrating our continued ability to deliver value under varying market conditions. There are several dynamics currently limiting market demand: first, global macroeconomic weakness, which is impacting overall IT spending; second, product transitions in the PC industry; and third, the continued adoption of tablets and smartphones, which is muting PC sales growth.

These headwinds notwithstanding, the Western Digital team remains focused on creating outstanding economic value, building on our strong multiyear track record. There is a tremendous opportunity as we innovate and enable customers to store, manage and connect the massive and growing amounts of digital data in their personal and professional lives. This opportunity extends well into the future.

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