Thes guys can spin anything...
Summary of the WDC CC on the WDC site:
wdc.com
but it doesn't include the most interesting parts, Q&A:
Here's a rough summary:
1) G Munson
Q=> Inventory DDs? Price to move? Will it upset market
A - captured DDs being resold at lower ASPs so that will impact. Will be moving
to OEM and dist customers. Dist side will price by itself. Our inv and supply has been
dramatically brought down which has prob brought some shortages out there
Q=> Seq rev growth?
A - vol has been brought down, but it is coming back up. Target is 5mil units for DecQ
Q=> New products? Devlp expenses involved?
A - $8-$10mil per Q invested in the new products
2) K Alexy
Q=>Demnad towards end of Q? Outlook?
A - demand decent. Should pull thru this Q and continue. Should be quite strong
3) D Lewis
Q=> OEM feedback on recall issue? Next gen product timing? Any fallout?
A - OEM and dist customers have been extrememly supportive. They are happy with
how we handled it. Relationships have never been stronger. We stand behind our products
Qual impact - small delay in 9-10platter pgms due to chip issue. All major OEMs planning
on qual. This will have no lingering issues
Q=> any thoughts of going after chip supplier?
A - looking into some ins possibilities…
Q=> kale? Move from Singa to Malay?
A - move going quite nicely. Lines are ready to go. Waiting for arrival of chips to start prod back up.
4) M Carboy(?)
Q=> Relationship w\ IBM helpful at all with chip problem?
A - these are not IBM gen DDs, they are caviar DDs. Did not help with failure recognition.
It was caught internally.
Q=> material cert process changing?
A - this would not have been found until life test. Some qual procedures(specifically the supplier)
has change.
5) …
Q=> Anything drawn on revolver? Accts payable issues?
A - No draw on bank revolver. Payable dropping for same reason as receivables due to last couple
of weeks we were shut down due to chip issue.
6) Bill Lewis, H&Q
Q=> Desktop vs ent shipments and outlook? Pricing outlook? Looking fwd.
A - Current Q split is confusing due to restruct and recall. Desktop drive lost a little more than prior
Q did, but not a whole lot(if you take all of charges and special circumstances out…)
Ent vol going fwd will be flat for a while prob till end of fiscal year.
Pricing in Q1 was very aggr, fairly similar to what we saw last Q. Little early to tell yet this Q either OEM
or dist.
Q=> Vol desktop to ent DDs this Q?
A - 200k ent DDs. 3.2mil desktop. We missed about 1.5mil due to product recall issue and some Aug component issues
also acctd for some of the drop
Q=> Linearity of demand this Q? Typically Oct & Nov are the strong Qs w\ Dec tapering off. Will the fact that
you are shut down at the start effect you more?
A - yes, Oct&Nov are the strongest usu. Cearly the delay will have an impact. We feel quite strongly that we could
have shipped significantly more DDs this Q… Impact has been acctd for
Q=> Recalled units sold as new or refurb or what?
A - will be sold as new
Q=> Is revlover reference the same as equity line of credit you've referred to in previous Qs?
A - No. I was referring to bank revaolver. We have used equity line($150mil avail) - we have used $32mil of that.
~6.2mil shares at a little over $5. Have $100 and something million left.
Q=> IBM server slowdown news. You've seen strong demand… Any signs at all that you've seen of a slowdown?
A - hard to tell. Mixed messages. Need to ask individual companies
Q => I appluad your recall, but with all the capacity out there… How confident are you that you can maintain share?
A - there is no question in our minds that the level we had will be achieved or even more so. The way we handled this
will be rewarded with share position. There will be a short term effect which is negative, but positive long term.
Q => any component shortages? Any material or contamination issues out there?
A - no shortages seen that will effect our shipments. Only shortages we see is DRAM.
I will add, if someone has a contamination problem, it is NOT us.
Q=> what % of mix will be higher cap products?(8.6 - 10.2 range)?
A - 9GB and 10GB will be the majority of our shipments in the Mar Q. Prob 100% on the desktop side. Will be
ramping those prod this Q.
Q=> working capital needed to expand biz?
A - won't need much due to short cycles.
Q=> Tax refunds available?
A - we would have done that by now.
Q=> When will you return to profitability?
A - depends on our own execution and industry conditions. I cannot give you a timeline.
Q=> any changes comtemplated on bank lines?
A - currently in compliance. Lots of other possibilities avail. Looking, but nothing seen for now.
We do not plan on drawing on the revolver, but we will do what we need to do.
Q=> customers > 10%?
A - CPQ, DELL.
Q=> when will you get back o 5.7mil units again?
A - low 5s this Q, Q3 is usu flat or down. JuQ should be back to high 5mil range.
todd |
