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Western Digital (WDC) to Separate HDD and Flash Businesses
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Western Digital Corp (WDC - Free Report) announced that it has taken a significant step in its corporate strategy by planning to split the company's HDD (Hard Disk Drive) and Flash businesses. This strategic move is aimed at establishing two independent, publicly traded companies, each with a specific focus on its respective market.
The strategic move is aimed at enhancing the ability of each business to drive innovation, develop new technologies and products, and further leverage new growth opportunities. Moreover, it will likely allow the companies to operate more efficiently due to their separate capital structures. The split-off is likely to generate significant value for its shareholders.
The decision to separate these businesses is also expected to provide strategic flexibility by offering the businesses to explore opportunities that align with their unique strengths and market conditions. The company envisions this separation as a tax-free process and aims to execute it during the second half of 2024.
The HDD company will become a separate publicly traded entity while keeping the Western Digital name. In contrast, the flash business is anticipated to be spun off to Western Digital stockholders in a tax-free transaction, whose name will be revealed later on.
Western Digital is one of the largest HDD producers in the United States. The company designs, develops, manufactures and markets a broad range of HDDs used in desktop PCs, servers, network-attached storage devices and a host of other consumer electronic devices.
The company reported first-quarter fiscal 2024 non-GAAP loss of $1.76 per share, narrower than the Zacks Consensus Estimate of a loss of $1.88. The company had reported earnings per share (EPS) of 20 cents in the year-ago quarter.
Revenues of $2.750 billion beat the Zacks Consensus Estimate by 3.1%. However, the top line decreased 26% year over year owing to weak performance across Cloud and Client end markets. On a sequential basis, revenues increased 3%.
Flash revenues declined 9.7% from the year-ago quarter’s figure to $1.556 billion. Sequentially, flash revenues rose 13%. HDD revenues decreased 40.7% year over year to $1.194 billion. Revenues decreased 7.8% quarter over quarter.
On a quarter-over-quarter basis, HDD Exabytes sales decreased 5%. The company’s 26-terabyte UltraSMR accounted for nearly half of nearline exabyte shipments. The company is on track to qualify 28-terabyte UltraSMR drive and further expand into the 40-terabyte range.
Flash exabytes sales were up 26%. The WD_BLACK bit shipments increased significantly, with bit shipments more than doubling and content per unit increasing over 50% year over year. Total exabytes sales (excluding non-memory products) increased 2% sequentially.
Zacks Rank & Stocks to Consider
Currently, Western Digital carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 5.9% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 676.4%. Shares of ASUR have surged 51% in the past year.
The Zacks Consensus Estimate for Synopsys’ 2023 EPS has gained 2.5% in the past 60 days to $11.09. SNPS’ long-term earnings growth rate is 16.4%. Shares of SNPS have surged 67.5% in the past year.
The Zacks Consensus Estimate for Wix’s 2023 EPS has remained unchanged in the past 60 days to $3.35.
Wix’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 319.3%. Shares of WIX have rallied 3.2% in the past year.
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Western Digital (WDC) to Separate HDD and Flash Businesses
Western Digital Corp (WDC - Free Report) announced that it has taken a significant step in its corporate strategy by planning to split the company's HDD (Hard Disk Drive) and Flash businesses. This strategic move is aimed at establishing two independent, publicly traded companies, each with a specific focus on its respective market.
The strategic move is aimed at enhancing the ability of each business to drive innovation, develop new technologies and products, and further leverage new growth opportunities. Moreover, it will likely allow the companies to operate more efficiently due to their separate capital structures. The split-off is likely to generate significant value for its shareholders.
The decision to separate these businesses is also expected to provide strategic flexibility by offering the businesses to explore opportunities that align with their unique strengths and market conditions. The company envisions this separation as a tax-free process and aims to execute it during the second half of 2024.
Western Digital Corporation Price and Consensus
Western Digital Corporation price-consensus-chart | Western Digital Corporation Quote
The HDD company will become a separate publicly traded entity while keeping the Western Digital name. In contrast, the flash business is anticipated to be spun off to Western Digital stockholders in a tax-free transaction, whose name will be revealed later on.
Western Digital is one of the largest HDD producers in the United States. The company designs, develops, manufactures and markets a broad range of HDDs used in desktop PCs, servers, network-attached storage devices and a host of other consumer electronic devices.
The company reported first-quarter fiscal 2024 non-GAAP loss of $1.76 per share, narrower than the Zacks Consensus Estimate of a loss of $1.88. The company had reported earnings per share (EPS) of 20 cents in the year-ago quarter.
Revenues of $2.750 billion beat the Zacks Consensus Estimate by 3.1%. However, the top line decreased 26% year over year owing to weak performance across Cloud and Client end markets. On a sequential basis, revenues increased 3%.
Flash revenues declined 9.7% from the year-ago quarter’s figure to $1.556 billion. Sequentially, flash revenues rose 13%. HDD revenues decreased 40.7% year over year to $1.194 billion. Revenues decreased 7.8% quarter over quarter.
On a quarter-over-quarter basis, HDD Exabytes sales decreased 5%. The company’s 26-terabyte UltraSMR accounted for nearly half of nearline exabyte shipments. The company is on track to qualify 28-terabyte UltraSMR drive and further expand into the 40-terabyte range.
Flash exabytes sales were up 26%. The WD_BLACK bit shipments increased significantly, with bit shipments more than doubling and content per unit increasing over 50% year over year. Total exabytes sales (excluding non-memory products) increased 2% sequentially.
Zacks Rank & Stocks to Consider
Currently, Western Digital carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Asure Software (ASUR - Free Report) , Synopsys (SNPS - Free Report) and Wix.com (WIX - Free Report) . Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 5.9% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 676.4%. Shares of ASUR have surged 51% in the past year.
The Zacks Consensus Estimate for Synopsys’ 2023 EPS has gained 2.5% in the past 60 days to $11.09. SNPS’ long-term earnings growth rate is 16.4%. Shares of SNPS have surged 67.5% in the past year.
The Zacks Consensus Estimate for Wix’s 2023 EPS has remained unchanged in the past 60 days to $3.35.
Wix’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 319.3%. Shares of WIX have rallied 3.2% in the past year.