| | | WDC revenues from $5B last Q to $4.2B in the just reported Q.
I imagine revenues are going down next Q due to NAND price declines. Perhaps a lot.
WDC gross margins from 38% last Q to 31% in the just reported Q.
I imagine gross margins are going down next Q, again due to NAND price declines. Perhaps a lot.
WDC inventories $3.1B last Q up to $3.4B in the just reported Q.
WDC has lots of inventory to push out, pushing NAND prices lower, in Q1, the lowest demand season.
That's all awful.
What's good?
WDC is cutting $100m out of COGS, that will help gross margins. But $100m is only ~3% of total last Q COGS of $3.2B. The collapse in revenues and gross margins going forward will likely easily overwhelm this modest benefit, whenever it actually show up.
The operating expenses were $870m in the just reported Q. WDC is going to reduce them by $100m over time. That's pretty good, I suppose, but headcount reductions often take a year to appear, and it hurts future productivity (why are these unnecessary $100m of employees currently working anyways, makes ya wonder?)
Those two good items will improve the income statement by $200m when finally realized, perhaps in a year. WDC just lost $800m in revenue in 3 months, and the revenue losses (I expect) are going to continue strongly in 2019. I'm guessing next Q they lose more than $200m in revenue, and there goes the benefit of the $200m savings from the two "good things" which will be realized about a year from now.
WDC Q4 just reported Q revenues are about 20% below a year ago. All the lost disk drive sales are not coming back.
I have no idea what's pushing the stock up in after hours. The forward guidance is not posted on their web site. But in order for WDC to grow revenues NAND flash has to have a massive increase in bit consumption, at much lower prices per bit, where is that expected to come from?
Given vanishing disk drive sales, how in the world can WDC grow 4%-8% over the long term?
Interesting, it appears they no longer break out disk sales versus NAND sales. Ok, hard to tell how much they have left in disk to lose. They say SSDs are going to be strong growers in 2019. That's bad for them, as they have disk share to lose, and will gain less SSD units than they lose disk units.
Ya got me!
investor.wdc.com |
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