Headquarters: 20511 Lake Forest Drive, Lake Forest
Employees: 24,000; 950 in OC
Business: Disk drive maker
Market value, as of April 4: $4.5 billion
12-month revenue: $4 billion, up 22%
12-month net income: $285 million, up 74%
Year in review: Things went according to plan for Western Digital Corp., the industry’s second largest maker of drives for computers and consumer electronics after Seagate Technology LLC in Scotts Valley.
The plan: look at what is selling and then ramp up production of those products.
In the December quarter, Western Digital shipped 18 million drives, 11% more than in the year-ago period. Drives for portable computers, a market Western Digital re-entered in late 2004, were 1.4 million. Another 1.5 million drives went into digital video recorders.
Along with solid sales gains, Western Digital became more profitable in the past year. The company’s gross profit margin hit 20% in the December quarter, up from 18% in the prior quarter and 16% a year earlier.
The company saw change at the top in October. Arif Shakeel, Western Digital’s former chief operating officer, took over as chief executive. Former top executive Matt Massengill, who led a turnaround in the past few years, became executive chairman. The change surprised some, though it wasn’t dramatic,Shakeel and Massengill have led the company as a team for years.
What’s ahead: The drive industry is known for its ups and downs. After an up 2005, some are worried about a new round of price cuts for drives, which would crimp profits.
Some analysts say a price war erupted in February between Seagate and Western Digital, with prices falling as much as 12%. Other analysts dispute the extent of the price-cutting.
In December, key rival Seagate said it was buying Maxtor Corp. of Milpitas, the industry’s No. 4 drive maker. Analysts see the deal boosting Western Digital as some PC makers and others could steer business its way.
Wall Street’s take: Western Digital’s shares are flat for the year and off 17% from February when worries about prices surfaced. Western Digital, Seagate and Maxtor saw downgrades in February and early March that sent their shares down. One analyst called the sell-off overblown and said price cuts are in a normal range of about 5%.
For Western Digital’s fiscal year through June, analysts see $4.3 billion in sales, up 19% from a year earlier. Profits are seen growing 48% to $322 million.
WHO’S IN CHARGE
ARIF SHAKEEL
Chief executive
Joined company: 1985
Education: bachelor’s in mechanical engineering from Memphis State University, business master’s from Pepperdine University
Career: Joined company as product manager. For more than a decade, served in various posts, including vice president of materials in Asia. Became senior vice president of worldwide operations in 1999, chief operating officer in 2001. Added president’s title in 2002. Named chief executive in October.
Notable: Rock fan, fond of Rolling Stones and the Eagles. Also likes jazz.
