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Technology Stocks : Western Digital (WDC)
WDC 49.24-0.7%Aug 16 4:00 PM EDT

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From: Carey Thompson11/14/2006 4:58:18 PM
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Strong Year-Over-Year Growth Achieved in All Key Metrics

LAKE FOREST, Calif. - Nov. 2, 2006 - Western Digital Corp. (NYSE: WDC) today reported revenue of $1.3 billion on shipments of approximately 22.7 million units, and net income of $103 million, or $.46 per share for its first fiscal quarter ended Sept. 29, 2006. Included in the unit shipments were approximately 2.2 million 2.5-inch mobile hard drives and approximately 2.5 million 3.5-inch hard drives for utilization in personal and digital video recorders-both fast-growing, newer markets for the company.

In a separate news release today, the company announced that president and chief operating officer John Coyne will become chief executive officer on Jan. 2, 2007 and that current chief executive officer Arif Shakeel will remain with the company through June 29, 2007 as a full-time advisor and will stand for re-election to the board of directors at the next annual meeting. Coyne has joined the board and will also stand for re-election.

The first quarter results represented strong year-over-year performance, including 33 percent unit growth, 25 percent growth in revenue versus $1.0 billion in the year-ago period and 49 percent growth in net income over the $69 million reported last year. A year ago, the company reported earnings of $.31 per share in the fiscal first quarter and shipped 17.1 million units.

WD indicated that 35 percent of its Q1 revenue was derived from non-desktop PC sources including notebook PCs, consumer electronics, enterprise applications, and retail sales. Sixty-five percent of the company's first quarter revenue came from hard drives configured into desktop PCs, a market that remains strong. This compares with a mix in the year-ago quarter of 25 percent non-desktop PC revenue, 75 percent desktop PC revenue.

From a balance sheet perspective, the company generated $128 million in cash from operations during the September quarter, ending with total cash and short-term investments of $751 million.

Arif Shakeel, chief executive officer of WD, said, "Several years ago we identified expansion into new markets as a major long-term goal of the company. We have achieved this off the base of a highly-successful desktop hard drive business and an efficient and leveraged business model. Our Q1 results reflect the ongoing success of this diversification effort and a continuation of our consistent financial performance. As we address multiple growth opportunities in the years ahead, we will continue our emphasis on excellence in operations, including a relentless focus on customer satisfaction and the reliability and quality of our products."

The company's operating results reflected in this release do not include any adjustment relating to the findings of the Special Committee, previously announced on Oct. 23, 2006, with respect to its review of the company's historical stock option grants. Based on the review, it has been preliminarily determined that the company should have recognized approximately $21 million of additional stock-based compensation and tax-related expenses in its historical financial statements. However, the company does not anticipate a material adjustment to the operating results included in this release nor to the results for fiscal 2005 and 2006 included in its July 27, 2006 press release.

The investment community conference call to discuss these results and the company's outlook will be broadcast live over the Internet today at 2 p.m. PST/5 p.m. EST. The call will be accessible live and on an archived basis via the link below:

Audio Webcast: -- click on "Conference Calls"

Telephone Replay: 866-385-0197 (toll-free) or +1-203-369-0394 (international)
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