WD Announces Q4 Revenue of $1.4 Billion and Unit Shipments of 24.9 Million, Full Year Revenue of $5.5 Billion
Q4 Net Income of $233 Million, or $1.03 per Share, Including a $147 Million Favourable Adjustment for Deferred Tax Assets
August 07, 2007 Western Digital Corp. has reported its financial results for its fiscal year 2007 and fourth quarter ended June 29, 2007.
The company's results for the fiscal year reflected strong year-over-year performance, with revenue of $5.5 billion and operating income of $415 million. Net income was $585 million, or $2.59 per share, compared to $395 million, or $1.76 per share for the prior year. The 2007 and 2006 net income amounts included income tax benefits of $147 million and $22 million, respectively, related to adjustments to the value of the company's deferred tax assets.
These results represented increases in revenue of 26 percent over the prior year's $4.3 billion, unit shipment growth of 32 percent from 73.3 million to 96.5 million, and growth in cash and short term investments from $699 million to $907 million. On a year-over-year basis, the company expanded its share of revenue from newer markets from 29 percent to 43 percent. The company's newer market revenue includes hard drives for notebook PCs, consumer electronics, enterprise applications and WD branded products.
For the fourth quarter, revenue totalled $1.4 billion on shipments of approximately 24.9 million units, with net income of $233 million, or $1.03 per share. The fourth quarter net income includes a $147 million benefit to income taxes reflecting a favourable adjustment to the valuation allowance related to deferred tax assets.
The June quarter results also represented strong year-over-year performance, including growth in revenue and unit shipments of 26 percent and 30 percent, respectively. In the year-ago quarter, the company reported revenue of $1.1 billion, unit shipments of 19.2 million, and net income of $120 million, or $.53 per share. Net income in the year-ago period included $13 million in favourable adjustments to gross margin related to the resolution of certain items that impacted amounts previously recorded as cost, and a $22 million benefit to income taxes related to an adjustment to the value of the company's deferred tax assets.
Forty-six percent of Q4 revenue was derived from newer market sources, while 54 percent came from hard drives configured into desktop PCs. This compares with a mix in the year-ago quarter of 34 percent newer markets versus 66 percent desktop PC revenue.
The company shipped 3.8 million 2.5-inch mobile drives and 2.7 million 3.5-inch units for the PVR/DVR market, compared with 1.6 million and 2.2 million, respectively, a year ago. Branded products revenue of $230 million increased 142 percent from the prior year's $95 million. The company also continued to steadily grow its shipments of enterprise-class Serial ATA drives, the fastest-growing segment of the enterprise drive market.
The company generated $154 million in cash from operations during the June quarter, ending with total cash and short-term investments of $907 million. It also repurchased 2.5 million shares of common stock. Since May of 2004, the company has repurchased 14.2 million shares at a total cost of $188 million.
"We are very pleased with the performance of the WD team and the WD model in fiscal 2007," said John Coyne, president and chief executive officer of WD. "Our efficient organisation has leveraged significant investments over the last five years into a strong technology portfolio and compelling products. We are well-positioned to address the diverse and growing use of hard drives in commercial and consumer markets for years to come."
Coyne also noted that the company's planned acquisition of Komag, Inc., a leading media supplier, was proceeding on plan and that the company expects to complete the transaction in the current quarter. "We remain confident in the strategic benefits and synergies that will accrue to WD over the long term by having an internal media operation," he said.
