Western Digital Corporation is unique in that it is also a major manufacturer of platter hard drives and solid state drives. Both market segments didn’t perform very well last quarter, resulting in a 36% year-over-year decline in the company’s total revenue to $2.8 billion.
We emphasize that the WDC calendar has recently ended third quarter of fiscal year 2023, therefore their results are taken into account in the company presentation. Profit margin for the year fell to 10.6% from 31.7%, operating expenses fell 19% to $602 million, and the company couldn’t avoid a $304 million in operating loss.
Looking at Western Digital’s three main segments, “Cloud” revenue fell 32% for the year to $1.2 billion. In this case, the decline was capped at 2%. Customer revenue of $1 billion was down 44% year over year, down just 10% sequentially. Finally, in the consumer electronics segment, revenue fell 29% year over year to $600 million, down 22% sequentially.
In the solid-state storage segment, shipments fell by 14% sequentially, the average selling price also fell, but moving toward hard drives not only saw the volume of shipments in terms of capacity (by 15%), but also increased the average selling price of $99 to $109. Most of the company’s revenue last quarter came from hard drive sales ($1.5 billion), while flash memory accounted for just $1.3 billion, or 24% of hard drive sales. Combined, this kept the total return at 11%.
In its most recent quarter, WDC shipped 12.6 million hard drives, down slightly from 12.9 million in the previous quarter, but down significantly from the same period last year when 19.8 million hard drives shipped. Last quarter, 6.3 million disks went to the cloud segment, 3.6 million went to the client segment, and the consumer electronics sector was capped at 2.7 million disks.
For the current quarter, the company expects revenue of between $2.4 billion and $2.6 billion, a non-GAAP income margin of 3% to 5% and operating expenses in the range of $580 million to $600 million, up 11% at the last quarter using the same methodology, then the above forecast for the current quarter indicates a worsening of the situation with the profitability of the company. According to company representatives, the storage market will recover longer than expected and customer costs will also shrink in the cloud segment. None of this stopped WDC shares from climbing 2.7% to $35.10 after the close.