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Technology Stocks : WDC, NAND, NVM, enterprise storage systems, etc.

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From: JCnieuwenj	11/19/2019 12:02:17 PM
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Western Digital Corporation (NASDAQ: WDC) RBC Global Technology, Internet, Media and Telecommunications Conference November 19 Over the last probably 12 to 18 months, we have been dealing with the cyclicality of the flash business, which has resulted in and that was created by essentially an oversupply situation as the industry transitioned from 2D NAND to 3D NAND and came up the learning curve. There was an oversupply issue associated with that that the industry has worked through. Compressing ASPS, compressing our margins and obviously compressing our financial results and resulting cash flows. What's happened over the course of the last 12 months and not to get into all the particularities but we have been saying for the last couple of quarters in terms of our earnings announcements that we believe that one, the industry has passed the trough in terms of that cyclicality and that by the end of December that the supply-demand situation as it relates to flash will be back-end equilibrium. And so we began to realize the benefits of that albeit modestly in our past fiscal Q1 where we began to see our margin profile and our profitability improve. We expect further progress albeit modestly in the December quarter in terms of our financial results where our income is improving and we expect that that will continue into the first half of this year and then accelerate as we move through the back half of calendar year 2020. So one of the things that we've gotten a lot of questions on is why the modest improvement versus a more sharp kind of the sort of recovery and just to kind of emphasize a couple of things that I just noted is that one there's still some inventory that is sloshing around in the system in terms of excess inventory that needs to get worked through this quarter. When we look at the first half of calendar 2020 one of the things that we have recognized is that it's a seasonally slower period of time whereas the supply tends to be linear. So during the first half of the year, there will be a little bit of inventory built up in excess of natural demand and so that will create -- that will minimize margin recovery and make it more moderate as we move through the back half of the year that will correct itself and we would expect that through calendar 2020 as we exit that period will actually be an undersupply situation resulting in better pricing, better margins etcetera. So that's kind of a quick summary at least as it relates to the flash business. More here : seekingalpha.com

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