John Coyne left his post as chief executive of Western Digital Corp. on a high note.
He did it true to form, too, declining to claim any of the public spotlight as he passed the baton to Steve Milligan, who succeeded Coyne at the helm of the company last week.
Coyne kept a low profile throughout his five years in the top job.
He leaves with Western Digital as the world’s largest hard drive maker in units sold and revenue—and a billing as a Business Person of the Year (see related story below).
Hard-disk drives store and allow access to data. Western Digital’s disk drives go into computers, external storage devices, corporate networks and consumer electronics such as DVR players.
Western Digital had held the title for units shipped for several years. It was the deal Coyne engineered for its $4.3 billion buy of Hitachi Global Storage Technologies Ltd. and its lineup of drives geared for corporate customers that helped the company take the top spot on revenue.
Western Digital had for years relied heavily on the consumer market to drive sales.
The Hitachi Global buy brought entree to the growing server and storage market, “where spending is a little more resilient,” said Mark Moskowitz, an analyst in the San Francisco office of New York-based JPMorgan Chase & Co.
Hitachi Global, once part of Japan-based Hitachi Ltd., has become an important strategic partner for server and storage manufacturers, which should prove beneficial for Western Digital in the coming years, as data storage becomes increasingly important with the spread of smart phones, tablets and cloud computing.
The company is expected to boost market share in drives for corporate networks—the most profitable part of an industry largely known for commodity products and wild quarterly demand swings.
Analysts and company watchers largely credit Coyne for getting that deal through a thatch work of regulators around the globe even as he guided the company through a recovery of its operations in flood-engulfed Thailand. The company typically ships more than half its disk drives from Thailand, where it employs some 37,000 people.
“It’s been an impressive tenure,” Jayson Noland, senior analyst in the San Francisco office of Milwaukee-based Robert W. Baird & Co., told the Business Journal.
The payoff started in June, when Western Digital got over a brief stumble and regained the title as the world’s top seller of disk drives by units shipped from Cupertino-based rival Seagate Technology LLC.
That was just a few months after floodwaters had ebbed in Thailand, where Western Digital was among the hardest-hit manufacturers with operations there. The widespread floods forced both of its plants there to shut down for months, a disruption that stretched through the first quarter of 2012. Damages and recovery are expected to cost Western Digital at least $214 million.
• Headquarters: Irvine
• Business: Disk drives
• Founded: 1970
• Ticker symbol: WDC (Nasdaq)
• Fiscal 2012 revenue: $12.5 billion
• Recent earnings: $519 million for September quarter
• Market value: About $10.5 billion
• Notable: Chief Executive John Coyne stepped down on Jan. 2 after guiding company through biggest acquisition ever, flooding that disrupted operations is Thailand
The turnaround in Thailand was a testament to the crisp execution of the company under Coyne’s leadership, according to Moskowitz.
“Despite the challenges, Western Digital has been the consistent exception,” he said. “They’ve done it better than anyone.”
The company’s shares took a wild ride last year, falling on the Thai floods and hitting a 52-week low of $28.80 in late June. Results for its fiscal year, which ended June 28, helped spark a comeback.
Western Digital reported $1.6 billion in earnings on $12.5 billion in revenue. Its stock was hovering around $42 at year’s end, up 33% from the beginning of 2012.
“Fiscal 2012 was one of the most challenging and exciting years in our 42-year history,” Coyne said at the time. “While responding to … major natural disasters and completing the largest acquisition in the history of the industry, we achieved year-over-year revenue growth of 31% and more than doubled earnings per share.”
Impressive even for a company that’s been known as among the steadiest players in the hard-disk drive industry the last decade, managing to advance its technology and meet the demands of customers while trimming material costs along the way.
The company’s recovery in Thailand was buoyed by the effects of by its March buy of Hitachi Global, the largest acquisition in its 42-year history.
Hitachi Global goes under the name of its holding company, Viviti Technologies Ltd., and sells brands and products under that moniker.
Negotiations
It took a year of negotiations with U.S. and international regulators to sign off on the deal.
The company agreed to a series of conditions to gain approval from the Federal Trade Commission and regulators from the European Union, China and Japan. A key concession was the sale of its business of 3.5-inch hard-disk drives. The deal sent the line of business, a production plant and other assets to Toshiba Corp. in Japan.
The divestiture also included the transfer or licensing of intellectual property rights, the transfer of personnel, and supply of certain disk drive components.
As part of the deal, Western Digital acquired Toshiba Storage Device Co. in Thailand, which lost its hard drive manufacturing operation in the Thai flooding.
