Western Digital Corporation (WDC - Free Report) reported fiscal fourth-quarter 2023 non-GAAP loss of $1.98 per share, narrower than the Zacks Consensus Estimate of a loss of $2. The company had reported earnings per share (EPS) of $1.78 in the prior-year quarter.
The performance was affected by a challenging macro environment and underutilization charges, which weighed on the margins.
Revenues of $2.672 billion beat the Zacks Consensus Estimate by 6.3%. However, the top line decreased 41% year over year owing to weak performance across all segments. On a sequential basis, revenues declined 5%.
Quarter in Detail
At the beginning of first-quarter fiscal 2022, Western Digital started reporting revenues under three refined end markets — Cloud (includes products for public or private cloud), Client (includes products sold directly to OEMs or through distribution) and Consumer (includes retail and other end-user products).
Revenues from the Cloud end market (37% of total revenues) fell 53% year over year to $994 million owing to lower shipments of both hard drive and flash products. On a sequential basis, cloud revenues were down 18%.
Revenues from the Client end market (39% of total revenues) were down 37% year over year to $1,035 million. The downtick was caused by lower flash pricing on a year-over-year basis, coupled with reduced client SSD and hard drive shipments for PC applications. Client revenues increased 6% sequentially.
Revenues from the Consumer end market (24% of total revenues) were down 19% year over year to $643 million. Revenues increased 3% on a sequential basis. Sequential performance benefited from higher retail SSD shipments.
Considering revenues by product group, Flash revenues (51.5% of total revenues) declined 42.6% from the year-ago quarter’s figure to $1.377 billion. Sequentially, flash revenues rose 5.4%.
Hard disk drive (HDD) revenues (48.5% of total revenues) decreased 40% year over year to $1.295 billion. Revenues were down 13.4% quarter over quarter.
Key Metrics
The company shipped 11.8 million HDDs at an average selling price (ASP) of $99. The reported shipments declined 28.5% from the prior-year quarter’s levels.
On a quarter-over-quarter basis, HDD Exabytes sales were down 18%. Flash exabytes sales were up 15%. Total exabytes sales (excluding non-memory products) were down 13% sequentially.
ASP/Gigabytes (excluding licensing, royalties, and non-memory products) were down 6% sequentially.
Margins
Non-GAAP gross margin was 3.9% compared with 32.3% reported in the year-ago quarter.
HDD’s gross margin contracted 750 bps year over year to 20.7%. Flash gross margin was a negative 11.9% against 35.9% reported in the prior-year quarter.
Non-GAAP operating expenses moved down 23% from the year-ago quarter’s level to $582 million.
Non-GAAP operating loss totaled $478 million against the non-GAAP operating income of $702 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $2.02 billion compared with $2.22 billion reported as of Mar 31.
The long-term debt (including the current portion) was $5.857 billion as of Jun 30.
Western Digital used $68 million in cash from operations against $296 million of cash generated from operations in the previous-year quarter.
Free cash outflow amounted to $219 million in the quarter under review compared with the free cash outflow of $97 million reported in the prior-year quarter.
Fiscal Q1 Guidance
For first-quarter fiscal 2024, the company expects non-GAAP revenues in the range of $2.55-$2.75 billion. The Zacks Consensus Estimate is currently pegged at $2.51 billion.
Management projects a non-GAAP loss per share between $1.80 and $2.10. The Zacks Consensus Estimate is currently pegged at a loss of $2 per share.
WDC expects non-GAAP gross margin in the range of 2.5-4.5%. Non-GAAP operating expenses are expected to be between $570 million and $590 million.
Zacks Rank & Stocks to Consider
Currently, Western Digital carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are InterDigital (IDCC - Free Report) , Badger Meter (BMI - Free Report) and Woodward (WWD - Free Report) . InterDigital and Badger Meter presently sport a Zacks Rank #1 (Strong Buy), while Woodward currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.
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Western Digital Corporation (WDC - Free Report) reported fiscal fourth-quarter 2023 non-GAAP loss of $1.98 per share, narrower than the Zacks Consensus Estimate of a loss of $2. The company had reported earnings per share (EPS) of $1.78 in the prior-year quarter.
The performance was affected by a challenging macro environment and underutilization charges, which weighed on the margins.
Revenues of $2.672 billion beat the Zacks Consensus Estimate by 6.3%. However, the top line decreased 41% year over year owing to weak performance across all segments. On a sequential basis, revenues declined 5%.
Quarter in Detail
At the beginning of first-quarter fiscal 2022, Western Digital started reporting revenues under three refined end markets — Cloud (includes products for public or private cloud), Client (includes products sold directly to OEMs or through distribution) and Consumer (includes retail and other end-user products).
Revenues from the Cloud end market (37% of total revenues) fell 53% year over year to $994 million owing to lower shipments of both hard drive and flash products. On a sequential basis, cloud revenues were down 18%.
Revenues from the Client end market (39% of total revenues) were down 37% year over year to $1,035 million. The downtick was caused by lower flash pricing on a year-over-year basis, coupled with reduced client SSD and hard drive shipments for PC applications. Client revenues increased 6% sequentially.
Revenues from the Consumer end market (24% of total revenues) were down 19% year over year to $643 million. Revenues increased 3% on a sequential basis. Sequential performance benefited from higher retail SSD shipments.
Considering revenues by product group, Flash revenues (51.5% of total revenues) declined 42.6% from the year-ago quarter’s figure to $1.377 billion. Sequentially, flash revenues rose 5.4%.
Hard disk drive (HDD) revenues (48.5% of total revenues) decreased 40% year over year to $1.295 billion. Revenues were down 13.4% quarter over quarter.
Key Metrics
The company shipped 11.8 million HDDs at an average selling price (ASP) of $99. The reported shipments declined 28.5% from the prior-year quarter’s levels.
On a quarter-over-quarter basis, HDD Exabytes sales were down 18%. Flash exabytes sales were up 15%. Total exabytes sales (excluding non-memory products) were down 13% sequentially.
ASP/Gigabytes (excluding licensing, royalties, and non-memory products) were down 6% sequentially.
Margins
Non-GAAP gross margin was 3.9% compared with 32.3% reported in the year-ago quarter.
HDD’s gross margin contracted 750 bps year over year to 20.7%. Flash gross margin was a negative 11.9% against 35.9% reported in the prior-year quarter.
Non-GAAP operating expenses moved down 23% from the year-ago quarter’s level to $582 million.
Non-GAAP operating loss totaled $478 million against the non-GAAP operating income of $702 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $2.02 billion compared with $2.22 billion reported as of Mar 31.
The long-term debt (including the current portion) was $5.857 billion as of Jun 30.
Western Digital used $68 million in cash from operations against $296 million of cash generated from operations in the previous-year quarter.
Free cash outflow amounted to $219 million in the quarter under review compared with the free cash outflow of $97 million reported in the prior-year quarter.
Fiscal Q1 Guidance
For first-quarter fiscal 2024, the company expects non-GAAP revenues in the range of $2.55-$2.75 billion. The Zacks Consensus Estimate is currently pegged at $2.51 billion.
Management projects a non-GAAP loss per share between $1.80 and $2.10. The Zacks Consensus Estimate is currently pegged at a loss of $2 per share.
WDC expects non-GAAP gross margin in the range of 2.5-4.5%. Non-GAAP operating expenses are expected to be between $570 million and $590 million.
Zacks Rank & Stocks to Consider
Currently, Western Digital carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are InterDigital (IDCC - Free Report) , Badger Meter (BMI - Free Report) and Woodward (WWD - Free Report) . InterDigital and Badger Meter presently sport a Zacks Rank #1 (Strong Buy), while Woodward currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Get the latest research report on BMI - FREE
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