WDC c. call continued:
(3) Questions:
(a)OEM business revenue decline was larger because of the longer time to qualify the 2.1 product (first MR product) and issues involved with last TF products - they were not qualified
Enterprise Sales: > 10% of revenue
(b)Op exp: up slightly next q or 2 - greater R&D for enterprise one reason
GM: "some modest improvement" in Q4 "though clearly not anywhere close to where we'd like to see them"
Bottom Line: Because of "aggressive pricing" "envisions no improvement here pre-tax
Units: Sees OEM growing back, will not participate in "unprofitable" market share areas.
(c) Industry channel: saw channel "drop slightly", drop in finished goods as well, still admits "too many weeks out there", once they bring this down "hopefully things will get better"
Aggressive Pricing: if someone has inventory then sees aggressive pricing to get rid of the inventory, once "inventory reduces" with "some time lag" prices will improve
(d) Yield: "MR conversion has gone well"
Compaq Build to Order model effect on WDC inventory: sees none because WDC is JIT already.
(e) ASPs: pricing was "more aggressive" than expected, with new OEMs and new quals sees "improvement in ASPs going forward"
Product Mix: <= 2.5 G: 40%, >= 4.0 G: 38% no further breakdown.
Head count: no layoffs necessary - natural attrition
Drives for sub 1000 - "not going to tip our hand" on progress here, aiming for '$85' drives.
(f) Fibre Channel: later when customers deem it important
Endgame 3-6 quarters out: WDC advantages - time to market, quality, services, very strong OEM relationships, + a few more things (mysterious tone of voice!!!)
(g) 2.8 G/p shipping in volume this q: "on target" and "on time"
Expects 3+ G/p to be shipping as well.
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more later...
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Shane. |
