Western Digital Corp. (WDC) 6 5/8 -3/8: disk drive maker reports a fiscal Q3 loss of $0.68 a share, in line with the First Call mean, vs a yr-ago loss of $0.51;
Western Digital Announces Third Quarter Results
PR Newswire - April 21, 1999 16:36
IRVINE, Calif., April 21 /PRNewswire/ -- Western Digital Corporation (NYSE: WDC) today reported revenues of $668.5 million and a net loss before charges of $61.3 million , or $.68 per share, for its fiscal quarter ended March 27, 1999. The net loss for the quarter was $114.3 million, or $1.27 per share, including charges of $12.0 million for in-process research and development related to the acquisition of Crag Technologies and $41.0 million resulting primarily from the consolidation of the Company's desktop and enterprise manufacturing facilities and operations. In the year ago period, the Company reported a net loss of $45.0 million, or $.51 per share.
For the first nine months of fiscal year 1999, the Company posted a net loss of $391.2 million, or $4.39 per share, on revenue of $2.1 billion, versus a net loss of $127.5 million, or $1.46 per share, on revenue of $2.9 billion for the first nine months of fiscal 1998. The fiscal 1999 results include the first quarter's special charges of approximately $85.0 million and the $53.0 million of charges recorded in the third quarter as described above. The 1998 results included special charges in the second quarter of approximately $148 million . Excluding special charges in both fiscal periods, year-to-date net loss and net loss per share were $253.7 million and $2.85, respectively, in 1999 versus net income and diluted earnings per share of $18.7 million and $.20, respectively, in 1998.
Commenting on the March quarter results, Chuck Haggerty, chairman, president and chief executive officer of Western Digital stated: "Despite aggressive pricing and a mid-quarter slump in demand, we were able to achieve the bottom-line operating forecast because of our improving product mix, increased efficiencies, and cost reductions. The improvements in our desktop products were noteworthy as gross margins in this business reached their highest levels since September 1997.
"We completed a number of steps in the last four months that will be critical to further operational and financial improvements and to the long-term positioning of the Company. To lower costs and increase efficiencies, we completed the combination of two manufacturing facilities in Singapore, consolidated two drive business groups, and sold our media operation to Komag. We shipped our first desktop drives with GMR head and 7200 RPM technologies based on our agreement with IBM; we acquired Crag Technologies to enter the storage systems business; and we completed the first phase of our agreement with Sony Corporation to develop an audio-video hard drive for the consumer market.
"We were successful in ramping production of our 4.3GB per platter WD Caviar desktop family -- featuring the Ultra ATA66 interface and Data Lifeguard technology -- to more than 70% of unit shipments in the quarter with all of our major PC OEM, channel and retail partners taking shipments. We remain focused on significant opportunities in the Enterprise drive business with our 9 and 18GB low profile drives and our recently announced 10,000 RPM product."
Western Digital Corporation is a leader in information storage products and services. The company designs and manufactures hard drives for personal and enterprise-wide computing, and markets them to leading systems manufacturers and selected resellers under the Western Digital brand name. Western Digital is the first Fortune 500, multinational company to have been awarded company-wide ISO 9001 registration, linking all WD organizations with a consistent global standard for quality processes. The company was founded in 1970 and has long been noted for its storage and end-market systems-level design knowledge. The company's home page can be found at westerndigital.com.
This release contains forward-looking statements, including statements relating to future operational and financial improvements, the long-term positioning of the company, and opportunities in the Enterprise drive business. The forward looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: development of non-traditional markets for hard drives; overall supply and customer demand in the hard drive industry; continued improvement in time to market and time to volume of our new hard drives; changes in customer order patterns; successful qualification of our drives with key OEM customers; business conditions and growth in the personal and enterprise computing industry; and other factors discussed in our recent SEC filings. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
Mar. 27, Mar. 28, Dec. 26, Mar. 27, Mar. 28,
1999 1998 1998 1999 1998
Revenues,
net $668,456 $831,294 $738,590 $2,057,904 $2,891,022
Costs and expenses:
Cost of
revenues 628,592 795,015 719,423 2,081,625 2,749,232
Research and
development 62,699 46,949 50,363 164,983 133,723
Selling,
general and
administrative 46,210 47,551 47,819 151,361 141,423
Restructuring
provision 41,000 -- -- 41,000 --
Total costs
and
expenses 778,501 889,515 817,605 2,438,969 3,024,378
Operating
loss (110,045) (58,221) (79,015) (381,065) (133,356)
Net interest
income
(expense) (4,248) (536) (3,238) (10,139) 4,067
Loss before
income
taxes (114,293) (58,757) (82,253) (391,204) (129,289)
Provision
for income
taxes -- (13,735) -- -- (1,791)
Net loss $(114,293) $(45,022) $(82,253) $(391,204) $(127,498)
Loss per common share:
Basic $(1.27) $(.51) $(.93) $(4.39) $(1.46)
Diluted $(1.27) $(.51) $(.93) $(4.39) $(1.46)
Common shares used in computing
per share amounts:
Basic 89,883 87,812 88,888 89,105 87,291
Diluted 89,883 87,812 88,888 89,105 87,291
WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
Mar. 27, Dec. 26,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $297,095 $353,660
Accounts receivable, net 311,462 371,960
Inventories 163,413 160,974
Prepaid expenses 34,659 24,975
Total current assets 806,629 911,569
Property and equipment, net 312,108 342,779
Intangible and other assets, net 39,685 42,174
Total assets $1,158,422 $1,296,522
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $349,597 $386,004
Accrued expenses 304,286 314,771
Total current liabilities 653,883 700,775
Long-term debt 537,784 531,505
Deferred income taxes 17,076 16,711
Shareholders' equity:
Common stock, $.01 par value 906 891
Additional paid-in capital 142,128 125,702
Accumulated deficit (193,355) (79,062)
Total shareholders' equity (50,321) 47,531
Total liabilities and
shareholders' equity $1,158,422 $1,296,522
SOURCE Western Digital Corporation
/CONTACT: Robert J. Blair of Western Digital Corporation, 949-932-7834,
bob.blair@wdc.com/
/Company News On-Call: prnewswire.com or fax,
800-758-5804, ext. 963250/
/Web site: westerndigital.com
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