Western Digital shares traded higher late Thursday on better-than-expected financial results for the company’s third quarter for hard drive and flash memory companies.
Western Digital (ticker: WDC) had sales of $ 4.1 billion for the quarter ended March 31. That’s a 1% year-over-year decrease but is above the forecast range of $ 3.8 billion to $ 4.05 billion. Non-GAAP earnings of $ 1.02 per share were well above the company’s forecast of 55 to 75 cents.
Investors reacted warmly, and Western Digital stock rose nearly 10% in after-hours trading. The company, which makes hard drives and data storage products for personal computers and servers, said retail demand for desktop and notebook computers grew tremendously during the quarter.
“The team has delivered solid results this quarter, particularly as we continue to adjust our business and technology portfolio to capitalize on the immense opportunities in the storage industry,” said David Goeckeler (pictured), chief executive of Western Digital (pictured) , in his remarks. “During the quarter, we gained strength in the retail business and achieved our target earnings to complete qualification of our second-generation energy-assisted hard drives and SSD products with some of the world’s largest data center operators.”
After a breakdown of sales by business area, Western Digital said the client device unit was the top earner, with sales exceeding $ 2.1 billion. Client solutions raised $ 1 billion, while data center equipment and solutions raised $ 807 million.
Data center equipment had sales of $ 1.2 billion, down 19%. However, the company has seen sequential growth with its NVMe solid-state drives (Nonvolatile Memory Express, an interconnection standard for certain storage devices) on an unspecified “cloud titan”. (This is apparently a reference to one of the big three cloud companies – Amazon, Microsoft, or Google.) The company added that “Western Digital’s power-assisted hard drives have also completed qualification for almost all cloud and enterprise customers, including everyone became cloud titans. “The company announced that its customer solutions segment had sales of $ 888 million, up 8% due to the strength of products sold in retail stores.
In an interview with Barron, Western Digital CEO David Goeckeler said that flash memory device prices continue to rise and that Western has been able to increase prices of consumer products sold through retailers and distributors on a weekly and in some cases daily basis. “We can react to changes in the market and relocate the offer to where there are more market opportunities,” he says.
Goeckeler declined to give a long-term outlook on memory prices, but said the company continues to see a “strong demand environment”. He adds that supply bottlenecks aren’t really a problem for the company – even though the company uses microcontrollers and other parts that are in short supply. “We can do it all,” he says.
The company said it had cash from operations of $ 425 million for the quarter. For the third quarter, Western Digital expects revenues between $ 3.58 billion and $ 4.05 billion, compared to Wall Street’s forecast of $ 3.88 billion.