News Summary
- Second quarter revenue was $4.29 billion, up 5% sequentially
(QoQ). Cloud revenue increased 6% (QoQ), Client revenue decreased
3% (QoQ) and Consumer revenue increased 14% (QoQ).
- Second quarter GAAP earnings per share (EPS) was $1.63 and
Non-GAAP EPS was $1.77.
- Expect fiscal third quarter 2025 revenue to be in the range of
$3.75 billion to $3.95 billion.
- Expect Non-GAAP EPS in the range of $0.90 to $1.20.
Western Digital Corp. (Nasdaq: WDC) today reported fiscal second
quarter 2025 financial results.
“As we finalize the separation of our businesses, we are
confident that both Western Digital and Sandisk will continue
driving innovation and providing compelling storage solutions to
customers while delivering long-term shareholder value,” said David
Goeckeler, Western Digital CEO. “We expect that our strong
performance in HDD and our strategic approach to managing our Flash
business within the New Era of NAND will allow each company to
capture the growing demand for storage driven by the AI Data
Cycle.”
Q2 2025 Financial Highlights
($ in millions, except per share
amounts)
GAAP
Non-GAAP
Q2 2025
Q1 2025
Q/Q
Q2 2025
Q1 2025
Q/Q
Revenue
$4,285
$4,095
up 5%
$4,285
$4,095
up 5%
Gross Margin
35.4%
37.9%
down 2.5 ppt
35.9%
38.5%
down 2.6 ppt
Operating Expenses
$664
$809
down 18%
$674
$691
down 2%
Operating Income
$852
$742
up 15%
$864
$884
down 2%
Diluted Net Income Attributable to Common
Shareholders
$581
$481
up 21%
$633
$634
down 0%
Net Income Per Share
$1.63
$1.35
up 21%
$1.77
$1.78
down 1%
GAAP
Non-GAAP
Q2 2025
Q2 2024
Y/Y
Q2 2025
Q2 2024
Y/Y
Revenue
$4,285
$3,032
up 41%
$4,285
$3,032
up 41%
Gross Margin
35.4%
16.2%
up 19.2 ppt
35.9%
15.5%
up 20.4 ppt
Operating Expenses
$664
$702
down 5%
$674
$561
up 20%
Operating Income (Loss)
$852
$(210)
*
$864
$(91)
*
Diluted Net Income (Loss) Attributable to
Common Shareholders
$581
$(301)
*
$633
$(243)
*
Net Income (Loss) Per Share
$1.63
$(0.93)
*
$1.77
$(0.75)
*
*
not a meaningful figure
The company had an operating cash inflow of $403 million and
ended the quarter with $2.29 billion of total cash and cash
equivalents.
Additional details can be found within the company’s earnings
presentation, which is accessible online at investor.wdc.com.
End Market Summary
Revenue ($M)
Q2 2025
Q1 2025
Q/Q
Q2 2024
Y/Y
Cloud
$
2,346
$
2,208
up 6%
$
1,071
up 119%
Client
1,168
1,209
down 3%
1,122
up 4%
Consumer
771
678
up 14%
839
down 8%
Total Revenue
$
4,285
$
4,095
up 5%
$
3,032
up 41%
In the fiscal second quarter:
- Cloud represented 55% of total revenue at $2.3 billion, up 6%
sequentially and more than doubling year-over-year. On a sequential
basis, the growth was due to an increase in nearline HDD shipments
while Flash was down. On a year-over-year basis, both HDD and Flash
revenue grew.
- Client represented 27% of total revenue at $1.2 billion, down
3% sequentially and up 4% year-over-year. Compared to last quarter,
Flash revenue declined as bit shipment growth was offset by pricing
pressure, while HDD revenue was flat. Year-over-year, an increase
in Flash revenue was primarily due to higher ASPs as bit shipments
declined and was partially offset by lower HDD revenue.
- Consumer represented 18% of total revenue at $0.8 billion, up
14% sequentially and down 8% year-over-year. Sequentially, both
Flash and HDD bit shipments grew and drove revenue growth while
pricing was a headwind. Year-over-year, the decrease was due to
lower shipments in Flash and HDD and pricing in Flash.
Business Outlook for Fiscal Third Quarter of 2025
Three Months Ending
March 28, 2025
GAAP
Non-GAAP(1)
Revenue ($B)
$3.75 - $3.95
$3.75 - $3.95
Gross margin
31.0% - 33.0%
31.5% - 33.5%
Operating expenses ($M)
$790 - $810
$700 - $720
Interest and other expense, net ($M)
~ $100
~ $100
Tax rate(2)
N/A
14.0% - 16.0%
Diluted earnings per share
N/A
$0.90 - $1.20
Diluted shares outstanding (in
millions)
~ 358
~ 358
_______________
(1)
Non-GAAP gross margin guidance excludes
stock-based compensation expense, amortization of acquired
intangible assets and amortization of patent licenses related to a
litigation matter, totaling approximately $20 million to $30
million. The company’s Non-GAAP operating expenses guidance
excludes stock-based compensation expense and expenses related to
business separation costs, totaling approximately $80 million to
$100 million. In the aggregate, Non-GAAP diluted earnings per share
guidance excludes these items totaling $100 million to $130
million. The timing and amount of these charges excluded from
Non-GAAP gross margin, Non-GAAP operating expenses, and Non-GAAP
diluted earnings per share cannot be further allocated or
quantified with certainty. Additionally, the timing and amount of
additional charges the company excludes from its Non-GAAP tax rate
and Non-GAAP diluted earnings per share are dependent on the timing
and determination of certain actions and cannot be reasonably
predicted. Accordingly, full reconciliations of Non-GAAP gross
margin, Non-GAAP operating expenses, Non-GAAP tax rate and Non-GAAP
diluted earnings per share to the most directly comparable GAAP
financial measures (gross margin, operating expenses, tax rate and
diluted earnings per share, respectively) are not available without
unreasonable effort.
(2)
Non-GAAP tax rate is determined based on a
percentage of Non-GAAP pre-tax income or loss. Our estimated
Non-GAAP tax rate may differ from our GAAP tax rate (i) due to
differences in the tax treatment of items excluded from our
Non-GAAP net income or loss; (ii) due to the fact that our GAAP
income tax expense or benefit recorded in any interim period is
based on an estimated forecasted GAAP tax rate for the full year,
excluding loss jurisdictions; and (iii) because our GAAP taxes
recorded in any interim period are dependent on the timing and
determination of certain GAAP operating expenses.
Investor Communications
The investment community conference call to discuss these
results and the company’s business outlook for the fiscal third
quarter of 2025 will be broadcast live online today at 1:30 p.m.
Pacific/4:30 p.m. Eastern. The live and archived conference
call/webcast and the earnings presentation can be accessed online
at investor.wdc.com.
About Western Digital
Western Digital is on a mission to unlock the potential of data
by harnessing the possibility to use it. With Flash and HDD
franchises, underpinned by advancements in storage technologies, we
create breakthrough innovations and powerful data storage solutions
that enable the world to actualize its aspirations. Core to our
values, we recognize the urgency to combat climate change and have
committed to ambitious carbon reduction goals approved by the
Science Based Targets initiative. Learn more about Western Digital
and the Western Digital®, Sandisk® and WD® brands at
www.westerndigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal securities laws, including statements
regarding expectations for: the company’s business outlook and
operational and financial performance for the fiscal third quarter
of 2025 and beyond; the performance and characteristics of the
company’s products and product portfolio; the company’s capital
investment strategy; demand and market conditions for our products
and growth opportunities; our expectations regarding our plan to
separate our HDD and Flash business units; and the proliferation of
the AI Data Cycle and its impact on the company’s industry,
products and performance. These forward-looking statements are
based on management’s current expectations and are subject to risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied in the forward-looking
statements. The preliminary financial results for the company’s
fiscal second quarter ended December 27, 2024 included in this
press release represent the most current information available to
management. Actual results when disclosed in the company’s Form
10-Q may differ from these preliminary results as a result of the
completion of the company’s financial closing procedures; final
adjustments; completion of the review by the company’s independent
registered accounting firm; and other developments that may arise
between now and the filing of the company’s Form 10-Q. Other key
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in the forward-looking
statements include: volatility in global economic conditions and
demand for the company’s products; operational, financial and legal
challenges and difficulties inherent in implementing a separation
of the company’s HDD and Flash businesses; inflation; increase in
interest rates and economic recession; future responses to and
effects of global health crises; the impact of business and market
conditions; the outcome and impact of the company’s announced
separation transaction, including with respect to customer and
supplier relationships, regulatory and contractual restrictions,
stock price volatility and the diversion of management’s attention
from ongoing business operations and opportunities; the impact of
competitive products and pricing; the company’s development and
introduction of products based on new technologies and expansion
into new data storage markets; risks associated with cost saving
initiatives, restructurings, acquisitions, divestitures, mergers,
joint ventures and the company’s strategic relationships;
difficulties or delays in manufacturing or other supply chain
disruptions; hiring and retention of key employees; the company’s
level of debt and other financial obligations; changes to the
company’s relationships with key customers; compromise, damage or
interruption from cybersecurity incidents or other data system
security risks; actions by competitors; the company’s ability to
achieve its GHG emissions reduction and other ESG goals; the impact
of international conflicts; risks associated with compliance with
changing legal and regulatory requirements and the outcome of legal
proceedings; and other risks and uncertainties listed in the
company’s filings with the Securities and Exchange Commission (the
“SEC”), including the company’s Annual Report on Form 10-K filed
with the SEC on August 20, 2024 to which your attention is
directed. You should not place undue reliance on these
forward-looking statements, which speak only as of the date hereof,
and the company undertakes no obligation to update or revise these
forward-looking statements to reflect new information or events,
except as required by law.
Western Digital, the Western Digital logo,
Sandisk and WD are registered trademarks or trademarks of Western
Digital Corporation or its affiliates in the US and/or other
countries.
WESTERN DIGITAL CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS (in millions;
unaudited; on a US GAAP basis)
December 27,
2024
June 28, 2024
ASSETS
Current assets:
Cash and cash equivalents
$
2,291
$
1,879
Accounts receivable, net
2,597
2,166
Inventories
3,420
3,342
Other current assets
1,064
673
Total current assets
9,372
8,060
Property, plant and equipment, net
2,930
3,167
Notes receivable and investments in Flash
Ventures
861
991
Goodwill
9,729
10,032
Other intangible assets, net
77
78
Other non-current assets
2,487
1,860
Total assets
$
25,456
$
24,188
LIABILITIES, CONVERTIBLE
PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
1,627
$
1,411
Accounts payable to related parties
369
313
Accrued expenses
1,576
1,480
Income taxes payable
468
525
Accrued compensation
516
608
Current portion of long-term debt
150
1,750
Total current liabilities
4,706
6,087
Long-term debt
7,216
5,684
Other liabilities
1,188
1,370
Total liabilities
13,110
13,141
Convertible preferred stock, aggregate
liquidation preference of $265 and $257, respectively
229
229
Total shareholders’ equity
12,117
10,818
Total liabilities, convertible preferred
stock and shareholders’ equity
$
25,456
$
24,188
WESTERN DIGITAL CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
millions, except per share amounts; unaudited; on a US GAAP
basis)
Three Months Ended
Six Months Ended
December 27,
2024
December 29,
2023
December 27,
2024
December 29,
2023
Revenue, net
$
4,285
$
3,032
$
8,380
$
5,782
Cost of revenue
2,769
2,540
5,313
5,191
Gross profit
1,516
492
3,067
591
Operating expenses:
Research and development
502
444
1,021
875
Selling, general and administrative
238
198
480
405
Gain on business divestiture
(113
)
—
(113
)
—
Business separation costs
44
36
87
36
Litigation matter
—
—
3
—
Employee termination, asset impairment and
other
(7
)
24
(5
)
81
Total operating expenses
664
702
1,473
1,397
Operating income (loss)
852
(210
)
1,594
(806
)
Interest and other expense
(111
)
(49
)
(225
)
(135
)
Income (loss) before taxes
741
(259
)
1,369
(941
)
Income tax expense
147
28
282
31
Net income (loss)
594
(287
)
1,087
(972
)
Less: dividends allocated to preferred
shareholders
4
14
8
29
Less: income attributable to preferred
shareholders
9
—
17
—
Net income (loss) attributable to common
shareholders
$
581
$
(301
)
$
1,062
$
(1,001
)
Net income (loss) per common share:
Basic
$
1.68
$
(0.93
)
$
3.08
$
(3.09
)
Diluted
$
1.63
$
(0.93
)
$
2.98
$
(3.09
)
Weighted average shares outstanding:
Basic
346
325
345
324
Diluted
357
325
357
324
WESTERN DIGITAL CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
millions; unaudited; on a US GAAP basis)
Three Months Ended
Six Months Ended
December 27,
2024
December 29,
2023
December 27,
2024
December 29,
2023
Operating Activities
Net income (loss)
$
594
$
(287
)
$
1,087
$
(972
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operations:
Depreciation and amortization
120
143
255
290
Stock-based compensation
77
72
161
149
Deferred income taxes
(28
)
(22
)
26
(68
)
Gain on disposal of assets
(4
)
—
(5
)
(87
)
Gain on business divestiture
(113
)
—
(113
)
—
Asset impairment
—
—
—
95
Gain on repurchases of debt
—
(4
)
—
(4
)
Amortization of debt issuance costs and
discounts
5
5
10
9
Other non-cash operating activities,
net
40
(29
)
57
(28
)
Changes in:
Accounts receivable, net
(139
)
(72
)
(431
)
75
Inventories
(36
)
281
(112
)
482
Accounts payable
26
274
242
299
Accounts payable to related parties
(93
)
(26
)
(54
)
(41
)
Accrued expenses
262
(309
)
109
(246
)
Income taxes payable
20
(169
)
(57
)
(494
)
Accrued compensation
(26
)
3
(76
)
4
Other assets and liabilities, net
(302
)
48
(662
)
(181
)
Net cash provided by (used in) operating
activities
403
(92
)
437
(718
)
Investing Activities
Purchases of property, plant and
equipment, net
(113
)
(150
)
(208
)
(81
)
Net proceeds from business divestiture
191
—
191
—
Activity related to Flash Ventures,
net
45
66
92
79
Strategic investments and other, net
—
24
3
26
Net cash provided by (used in) investing
activities
123
(60
)
78
24
Financing Activities
Employee stock plans, net
36
33
(28
)
(10
)
Convertible preferred stock issuance
costs
—
(2
)
—
(5
)
Purchase of capped calls
—
(155
)
—
(155
)
Repurchases of debt
—
(505
)
—
(505
)
Proceeds from debt, net of repayments
(37
)
1,262
(75
)
1,862
Debt issuance costs
—
(36
)
—
(36
)
Net cash provided by (used in) financing
activities
(1
)
597
(103
)
1,151
Effect of exchange rate changes on
cash
(10
)
4
—
1
Cash and cash equivalents reclassified to
assets held for sale
71
—
—
—
Net increase in cash and cash
equivalents
586
449
412
458
Cash and cash equivalents, beginning of
period
1,705
2,032
1,879
2,023
Cash and cash equivalents, end of
period
$
2,291
$
2,481
$
2,291
$
2,481
WESTERN DIGITAL CORPORATION
SUPPLEMENTAL OPERATING SEGMENT RESULTS (in millions; except
percentages; unaudited)
Three Months Ended
Six Months Ended
December 27,
2024
December 29,
2023
December 27,
2024
December 29,
2023
Net revenue:
HDD
$
2,409
$
1,367
$
4,620
$
2,561
Flash
1,876
1,665
3,760
3,221
Total net revenue
$
4,285
$
3,032
$
8,380
$
5,782
Gross profit:
HDD
$
929
$
339
$
1,772
$
612
Flash
609
131
1,341
(30
)
Total gross profit for segments
1,538
470
3,113
582
Unallocated corporate items:
Stock-based compensation expense
(12
)
(13
)
(26
)
(26
)
Amortization of licenses related to a
litigation matter
(10
)
—
(19
)
—
Amortization of acquired intangible
assets
—
(1
)
(1
)
(1
)
Recovery from contamination incident
—
36
—
36
Total unallocated corporate items
(22
)
22
(46
)
9
Consolidated gross profit
$
1,516
$
492
$
3,067
$
591
Gross margin:
HDD
38.6
%
24.8
%
38.4
%
23.9
%
Flash
32.5
%
7.9
%
35.7
%
(0.9
)%
Total gross margin for segments
35.9
%
15.5
%
37.1
%
10.1
%
Consolidated gross margin
35.4
%
16.2
%
36.6
%
10.2
%
The company manages and reports under two reportable segments:
hard disk drives (“HDD”) and flash-based products (“Flash”). In the
table above, total gross profit for segments and total gross margin
for segments are Non-GAAP financial measures, which are also
referred to herein as Non-GAAP gross profit and Non-GAAP gross
margin, respectively.
WESTERN DIGITAL CORPORATION
PRELIMINARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts; unaudited)
Three Months Ended
Six Months Ended
December 27,
2024
September 27,
2024
December 29,
2023
December 27,
2024
December 29,
2023
GAAP gross profit
$
1,516
$
1,551
$
492
$
3,067
$
591
Stock-based compensation expense
12
14
13
26
26
Litigation matter
10
9
—
19
—
Amortization of acquired intangible
assets
—
1
1
1
1
Recovery from contamination incident
—
—
(36
)
—
(36
)
Non-GAAP gross profit
$
1,538
$
1,575
$
470
$
3,113
$
582
GAAP operating expenses
$
664
$
809
$
702
$
1,473
$
1,397
Gain on business divestiture
113
—
—
113
—
Stock-based compensation expense
(65
)
(70
)
(59
)
(135
)
(123
)
Business separation costs
(44
)
(43
)
(36
)
(87
)
(36
)
Litigation matter
—
(3
)
—
(3
)
—
Employee termination, asset impairment and
other
7
(2
)
(24
)
5
(81
)
Strategic review
—
—
(20
)
—
(37
)
Other
(1
)
—
(2
)
(1
)
(4
)
Non-GAAP operating expenses
$
674
$
691
$
561
$
1,365
$
1,116
GAAP operating income (loss)
$
852
$
742
$
(210
)
$
1,594
$
(806
)
Gross profit adjustments
22
24
(22
)
46
(9
)
Operating expense adjustments
(10
)
118
141
108
281
Non-GAAP operating income
(loss)
$
864
$
884
$
(91
)
$
1,748
$
(534
)
GAAP interest and other expense,
net
$
(111
)
$
(114
)
$
(49
)
$
(225
)
$
(135
)
Litigation matter
4
2
—
6
—
Other
(5
)
—
(64
)
(5
)
(64
)
Non-GAAP interest and other expense,
net
$
(112
)
$
(112
)
$
(113
)
$
(224
)
$
(199
)
GAAP income tax expense
$
147
$
135
$
28
$
282
$
31
Income tax adjustments
(42
)
(11
)
(3
)
(53
)
19
Non-GAAP income tax expense
$
105
$
124
$
25
$
229
$
50
WESTERN DIGITAL CORPORATION
PRELIMINARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts; unaudited)
Three Months Ended
Six Months Ended
December 27,
2024
September 27,
2024
December 29,
2023
December 27,
2024
December 29,
2023
GAAP net income (loss)
$
594
$
493
$
(287
)
$
1,087
$
(972
)
Gain on business divestiture
(113
)
—
—
(113
)
—
Stock-based compensation expense
77
84
72
161
149
Business separation costs
44
43
36
87
36
Litigation matter
14
14
—
28
—
Employee termination, asset impairment and
other
(7
)
2
24
(5
)
81
Strategic review
—
—
20
—
37
Amortization of acquired intangible
assets
—
1
1
1
1
Recovery from contamination incident
—
—
(36
)
—
(36
)
Other
(4
)
—
(62
)
(4
)
(60
)
Income tax adjustments
42
11
3
53
(19
)
Non-GAAP net income (loss)
647
648
(229
)
1,295
(783
)
Less: amount allocated to preferred
shareholders
14
14
14
27
29
Non-GAAP diluted net income (loss)
attributable to common shareholders
$
633
$
634
$
(243
)
$
1,268
$
(812
)
Diluted income (loss) per common
share
GAAP
$
1.63
$
1.35
$
(0.93
)
$
2.98
$
(3.09
)
Non-GAAP
$
1.77
$
1.78
$
(0.75
)
$
3.55
$
(2.51
)
Diluted weighted average shares
outstanding:
GAAP
357
357
325
357
324
Non-GAAP
357
357
325
357
324
Cash flows
Cash flow provided by (used in) operating
activities
$
403
$
34
$
(92
)
$
437
$
(718
)
Purchases of property, plant and
equipment, net
(113
)
(95
)
(150
)
(208
)
(81
)
Activity related to Flash Ventures,
net
45
47
66
92
79
Free cash flow
$
335
$
(14
)
$
(176
)
$
321
$
(720
)
To supplement the condensed consolidated financial statements
presented in accordance with U.S. generally accepted accounting
principles (“GAAP”), the tables above set forth Non-GAAP gross
profit; Non-GAAP gross margin; Non-GAAP operating expenses;
Non-GAAP operating income and loss; Non-GAAP interest and other
expense, net; Non-GAAP net income and loss; Non-GAAP diluted income
and loss per common share and free cash flow (“Non-GAAP measures”).
These Non-GAAP measures are not in accordance with, or an
alternative for, measures prepared in accordance with GAAP and may
be different from Non-GAAP measures used by other companies. The
company believes the presentation of these Non-GAAP measures, when
shown in conjunction with the corresponding GAAP measures, provides
useful information to investors for measuring the company’s
earnings performance and comparing it against prior periods.
Specifically, the company believes these Non-GAAP measures provide
useful information to both management and investors as they exclude
certain expenses, gains and losses that the company believes are
not indicative of its core operating results or because they are
consistent with the financial models and estimates published by
many analysts who follow the company and its peers. As discussed
further below, these Non-GAAP measures exclude, as applicable, gain
on business divestiture; stock-based compensation expense; business
separation costs; charges related to a litigation matter; employee
termination, asset impairment and other; expenses related to our
strategic review; amortization of acquired intangible assets;
recovery from contamination incident; other adjustments; and income
tax adjustments. The company believes these measures along with the
related reconciliations to the GAAP measures provide additional
detail and comparability for assessing the company’s results. These
Non-GAAP measures are some of the primary indicators management
uses for assessing the company’s performance and planning and
forecasting future periods. These measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP
results.
As described above, the company excludes the following items
from its Non-GAAP measures:
Gain on business divestiture. In
connection with the company’s strategic decision to outsource the
manufacturing of certain components and assemblies in its
flash-based products, on September 28, 2024, the company completed
the sale of 80% of one of its Flash manufacturing subsidiaries. The
transaction resulted in a discrete gain, which the company believes
it is not indicative of the underlying performance of its
business.
Stock-based compensation expense.
Because of the variety of equity awards used by companies, the
varying methodologies for determining stock-based compensation
expense, the subjective assumptions involved in those
determinations, and the volatility in valuations that can be driven
by market conditions outside the company’s control, the company
believes excluding stock-based compensation expense enhances the
ability of management and investors to understand and assess the
underlying performance of its business over time and compare it
against the company’s peers, a majority of whom also exclude
stock-based compensation expense from their Non-GAAP results.
Business separation costs. The
company incurred expenses associated with the separation of its HDD
and Flash business units to create two independent, public
companies. The company believes these charges do not reflect the
company’s operating results and that they are not indicative of the
underlying performance of its business.
Litigation matter. The company has
recognized expenses related to a recent judgment in a patent
litigation matter, which consisted of an award of damages,
prejudgment interest, and estimated plaintiff legal costs. The
company also recognized expenses in its cost of revenue related to
the amortization of patent licenses that the company has
capitalized related to this litigation matter. The company believes
these charges do not reflect the company's operating results and
that they are not indicative of the underlying performance of its
business. For further information regarding the litigation matter,
see Note 17 to the notes to consolidated financial statements
included in the company’s Annual Report on Form 10-K filed with the
SEC on August 20, 2024.
Employee termination, asset impairment and
other. From time to time, in order to realign the company’s
operations with anticipated market demand or to achieve cost
synergies from the integration of acquisitions, the company may
terminate employees and/or restructure its operations. From time to
time, the company may also incur charges from the impairment of
intangible assets and other long-lived assets. In addition, the
company may record credits related to gains upon sale of property
due to restructuring or reversals of charges recorded in prior
periods. In addition, the company has taken actions to reduce the
amount of capital invested in facilities, including the
sale-leaseback of facilities. These charges or credits are
inconsistent in amount and frequency, and the company believes they
are not indicative of the underlying performance of its
business.
Strategic review. The company
incurred expenses associated with its review of strategic
alternatives that resulted in the planned separation of its HDD and
Flash business units to create two independent, public companies.
The company believes these charges do not reflect the company’s
operating results and that they are not indicative of the
underlying performance of its business.
Amortization of acquired intangible
assets. The company incurs non-cash expenses from the
amortization of acquired intangible assets over their economic
lives. Such charges are significantly impacted by the timing and
magnitude of the company’s acquisitions and any related impairment
charges.
Recovery from contamination
incident. In February 2022, a contamination of certain
materials used in the company’s manufacturing process occurred and
affected production operations at the flash-based memory
manufacturing facilities in Yokkaichi and Kitakami, Japan, which
are operated through the company's joint business ventures with
Kioxia Corporation (collectively, “Flash Ventures”). The
contamination resulted in scrapped inventory and rework costs,
decontamination and other costs needed to restore the facilities to
normal capacity, and under absorption of overhead costs which were
expensed as incurred. During the quarter ended December 29, 2023,
the company received a partial recovery of these losses from other
parties. The contamination charges and the related recovery are
inconsistent in amount and frequency, and the company believes they
are not part of the ongoing production operation of its
business.
Other adjustments. From time to
time, the company sells or impairs investments or other assets that
are not considered necessary to its business operations, or incurs
other charges or gains that the company believes are not a part of
the ongoing operation of its business. The resulting expense or
benefit is inconsistent in amount and frequency.
Income tax adjustments. Income tax
adjustments include the difference between income taxes based on a
forecasted annual Non-GAAP tax rate and a forecasted annual GAAP
tax rate as a result of the timing of certain Non-GAAP pre-tax
adjustments. The income tax adjustments also include adjustments to
estimates related to the current status of the rules and
regulations governing the transition to the Tax Cuts and Jobs Act
and the re-measurement of certain unrecognized tax benefits
primarily related to tax positions taken in prior quarters,
including interest. These adjustments are excluded because the
company believes that they are not indicative of the underlying
performance of its ongoing business.
Additionally, free cash flow is defined as cash flows provided
by (used in) operating activities less purchases of property, plant
and equipment, net, and the activity related to Flash Ventures,
net. The company considers free cash flow generated in any period
to be a useful indicator of cash that is available for strategic
opportunities including, among others, investing in the company’s
business, making strategic acquisitions, repaying debt and
strengthening the balance sheet.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250129369358/en/
Western Digital Corp.
Investor Contact: T. Peter Andrew 949.672.9655
peter.andrew@wdc.com investor@wdc.com
Media Contact: Media Relations 408.801.0021
WD.Mediainquiries@wdc.com
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