Irvine-based disk-drive maker Western Digital Corp. saw a big run up in its shares last week, with quarterly earnings that reflected well on a recent $4.8 billion acquisition of Hitachi Global Systems Technologies Ltd.
The results offered evidence of a recovery from last year’s flooding in Thailand that put a dent in the company’s operations.
Investors sent Western Digital’s shares up by about 20% on the news to a market value of more than $10 billion.
The company also gave details of a new management structure called for under terms of the deal for San Jose-based Hitachi Global.
Western Digital was required by regulatory authorities to operate two separate subsidiaries for at least two years after the Hitachi Global deal. The new management structure brings two new presidents—one to oversee the company’s operations under the WD banner and another for the Hitachi business.
WD President
Tim Leyden was promoted from chief operating officer to president of the company’s WD subsidiary.
Mike Cordano was named president of the Hitachi division and will be based in San Jose. He had served as executive vice president of sales and marketing for Hitachi Global prior to its acquisition by Western Digital earlier this year.
Both will serve under Steve Milligan, president of Western Digital Corp., who reports to Chief Executive Officer John Coyne.
“The structure has been adjusted to ensure continuity of leadership of our subsidiaries,” company spokesperson Steve Shattuck said.
The June quarter completed Western Digital’s fiscal year, and was the first to reflect fully the acquisition of Hitachi Global. The company posted record earnings on better-than-expected revenue for the quarter.
Quarterly sales totaled $4.75 billion, double from the year-ago period and above analysts’ projection of $4.25 billion in revenue.
• Headquarters: Irvine
• Business: Disk drive maker
• Founded: 1970
• Ticker symbol: WDC (Nasdaq)
• Annual revenue: $12.48 billion
• Recent earnings: $745 million for June quarter
• Market value: About $10.21 billion
• Notable: Shares got 20% lift on strong quarterly, annual earnings; named new presidents of WD, Hitachi divisions
Fivefold Leap
Profit for the quarter was $745 million, a nearly fivefold increase from a year earlier, and well beyond Wall Street expectations of about $640 million.
Western Digital shipped 71 million hard disk drives in the recent quarter, 31% more than a year ago and 61% more than the March quarter. It’s the second-biggest seller of disk drives by unit, with a 43% market share, behind Cupertino-based rival Seagate Technology LLC, which accounts for 46%.
The faster-than-expected recovery and acquisition has helped the second-largest locally based public company to a solid finish to its fiscal year.
Western Digital earned $1.61 billion, more than double its $726 million profit last year. Revenue for the year was $12.48 billion, up 31% from $9.53 billion.
The company’s strong results also reflected what appears to be a general recovery for the disk-drive industry after the Thai floods late last year and a strengthening in disk prices.
Thailand is the second-largest exporter of hard disk drives after China, and many companies saw capacity crimped as production facilities were damaged.
Western Digital was among the hardest hit manufacturers with operations there. The company typically ships more than half its disk drives from Thailand, and has about 37,000 employees there. It was forced to shut down two of its facilities after the waters swept the region.
Operations resumed after a few months and have steadily picked up pace.
Western Digital is now capable of “adequately meeting anticipated customer demand,” according to the company.
