Looks pretty negative. Is this industry, or WDC having problems?
Chuck Haggerty, chairman, president and chief executive officer of
Western Digital, said: "Despite the reductions in finished goods inventory
that we saw among industry leaders last quarter, there remain too many
drives in the distribution channel. This has caused a further acceleration of
desktop pricing pressure in the channel and at OEM customers in the June
quarter."
Loan defaults. This is coming from a company that was suppose to have so much cash.
The size of the Company's expected fourth quarter net loss will result,
unless cured, in a technical default under the Company's bank credit line at
the end of the quarter. The total available credit under the bank agreement
is $250 million, of which $50 million is outstanding in the form of a term
loan. The Company's borrowing capacity will be subject to the successful
re- negotiation of the terms of the credit line agreement. The Company is
currently in discussions with its lenders about these matters.
Exactly how far along are they with their MR transition? Is this problem exasperated by inferior product? Maybe they are loosing market rather than the market is in trouble?
The Company also reported that major OEM customer acceptance of its
first and second generation MR head products and of its future product
roadmap for both desktop and enterprise drives was very strong. "The
plan is in place, and progress is being made, to return Western Digital to
time-to-market leadership in the desktop business," Haggerty said. "Our
initial MR head programs are establishing a strong base of performance
with our strategic OEM customers as we head into the new fiscal year. In
the meantime, our Enterprise storage business continues to perform
profitably."
What a drag.
Regards,
Mark |
