by Brian Beeler

Western Digital Q1 2012 Results

Western Digital (NYSE:WDC) reported their quarter ending September of this calendar year last night; an excellent quarter for both the company and hard drive sales in general. Industry shipments for the quarter were a record breaking 176 million drives, topping estimates. WD's share of that haul was 57.8 million units, up 7.4% quarter over quarter and 14% over the same quarter last year. The great results are overshadowed by the flooding in Thailand however, which will lead to massive supply constraints for WD and the hard drive space in general over the next several quarters. 

The 176 million drives sold breaks down as such:

  • Computing space - 119 million units (WD - 41.2 million)
  • Near line enterprise - 6.8 million, Traditional enterprise - 7.9 million (WD - 2.4 million)
  • Branded products - 14.4 million (WD - 7.1 million)
  • DVR - 14.1 million (WD - 7.2 million)
  • Gaming, automotive and 1.8" drives fill the remainder

Western Digital expect the total addressable market for the December quarter to reach 170 million drives, which will be supply constrained due to the flooding in Thailand. Of that 170 million, WD is only forecasting 22-26 million units sold, less than half of the September quarter. The lack of supply in the hard drive space could cause upward price pressure for the next few quarters across the industry. 

Thailand Flooding

The flooding in Thailand has been a major problem for consumer electronics companies with significant operations in that country. Last week WD talked about the impact the flooding is having; but it seems to have only become a larger problem. 9 million people have been affected by the flooding in that region and water has broken through many of the defenses in the area. WD has a higher density of factories than other hard drive manufacturers in the flooded area, meaning it may take multiple quarters for them to catch up to demand when they get fully online again. It's not just WD's factories that are a problem though, many of their component suppliers are also suffering from the flooding.

Hitachi Acquisition

Western Digital has been spending in the quarter planning their integration with Hitachi. While hurdles out of the European Commission have come up, WD has submitted a plan that they believe will be accepted by November 30th. WD expects other agencies to conclude at roughly the same time, clearing the way for the transaction to close before the end of this calendar year. WD announced the deal in March, worth roughly $4.25 billion. 

Next Generation 2.5" SAS Drives

WD remains on plan to deliver their third generation 2.5" SAS hard drives within this calendar year. 

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