Western Digital Updates First Fiscal Quarter Expectations
September 07 2016 - 7:00AM
Business Wire
Western Digital Corp. (NASDAQ: WDC) today updated its
expectations for the first fiscal quarter of 2017 ending Sept. 30,
2016. Following the recent acquisition of SanDisk and the continued
progress in integrating its WD and HGST subsidiaries, the company
is addressing a larger number of customers with a broader portfolio
of hard drive and flash storage products, leading to a
better-than-expected product mix.
Enabled by ongoing strong execution, the company now expects its
first quarter revenue to be in the range of $4.45 billion to $4.55
billion compared to its earlier forecast of $4.4 billion to $4.5
billion. Non-GAAP gross margin is expected to be approximately 33%,
versus the earlier forecast of 32%, due to the improved mix and
pricing. Non-GAAP operating expenses are expected to be
approximately $905 million, versus the earlier forecast of $875
million, reflecting higher incentive compensation due to the
stronger business performance. Net interest expense is forecasted
to be lower than previously expected due to the recently completed
re-pricing of the company’s U.S. Term Loan B debt. The company now
expects first quarter EPS, on a non-GAAP basis to be in the range
of $1.00 to $1.05, compared with its earlier forecast range of
$0.85 to $0.90. The company will report its full results for the
first fiscal quarter in late October.
The company also announced that Mike Cordano, president and
chief operating officer and Mark Long, executive vice president,
chief financial and strategy officer will participate at the 2016
Citi Global Technology Conference. The fireside chat session at the
conference will be available on live webcast starting at 7:15 a.m.
Pacific / 10:15 a.m. Eastern time today on the company’s Investor
Relations home page at investor.wdc.com. A webcast replay of the
event will also be made available later today.
Non-GAAP Financial Measures
This press release includes an update to the company’s financial
guidance relating to non-GAAP gross margin, non-GAAP operating
expenses and non-GAAP diluted earnings per share (“EPS”) for the
first quarter of fiscal year 2017. Non-GAAP gross margin is a
non-GAAP measure defined as non-GAAP gross profit divided by GAAP
revenue. Our non-GAAP gross profit guidance excludes the
amortization of acquired intangible assets estimated to be
approximately $202 million, or 4% of gross margin, for the first
quarter. Our guidance for non-GAAP operating expenses excludes the
amortization of acquired intangible assets estimated to be
approximately $40 million for the first quarter. Our non-GAAP
diluted earnings per share guidance excludes charges totaling
approximately $477 million, or $1.64 per share, for the first
quarter, consisting of the amortization of acquired intangible
assets estimated to be approximately $242 million and debt
extinguishment charges relating to the repayment of the company’s
U.S. Term Loan B and assumed SanDisk convertible debt of $235
million.
The timing and amount of additional charges we exclude from our
non-GAAP financial measures, including employee termination, asset
impairment and other charges, charges to implement cost saving
initiatives, acquisition-related charges and, in the case of
non-GAAP EPS, related tax adjustments, are dependent on the timing
of certain actions and cannot be reasonably predicted. In addition,
our estimate for the amortization of acquired intangible assets is
based on preliminary allocations of the SanDisk purchase price and
may be adjusted as the company finalizes the valuation of these
acquired assets. Accordingly, reconciliations of non-GAAP gross
margin, non-GAAP operating expenses and non-GAAP EPS to the most
directly comparable GAAP financial measures (gross margin,
operating expenses and diluted income per common share,
respectively) are not available without unreasonable effort.
The non-GAAP measures noted above are used by the company’s
management to forecast, evaluate and review the financial results
of the company. Management believes these non-GAAP financial
measures are useful because they provide meaningful comparisons to
prior periods and exclude certain items that may not be indicative
of the underlying performance of the company’s business. These
non-GAAP financial measures should be used in addition to, and in
conjunction with, results presented in accordance with GAAP to
better understand the company’s financial performance. Non-GAAP
gross margin, non-GAAP operating expenses and non-GAAP EPS 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.
About Western Digital
Western Digital is an industry-leading provider of storage
technologies and solutions that enable people to create, leverage,
experience and preserve data. The company addresses ever-changing
market needs by providing a full portfolio of compelling,
high-quality storage solutions with customer-focused innovation,
high efficiency, flexibility and speed. Our products are marketed
under the HGST, SanDisk and WD brands to OEMs, distributors,
resellers, cloud infrastructure providers and consumers. Financial
and investor information is available on the company's Investor
Relations website at investor.wdc.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements concerning the company’s anticipated
financial results for its first fiscal quarter ending Sept. 30,
2016. 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. Other 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;
business conditions and growth in the storage ecosystem; impact of
competitive products and pricing; market acceptance and cost of
commodity materials and specialized product components; actions by
competitors; unexpected advances in competing technologies; our
development and introduction of products based on new technologies
and expansion into new data storage markets; risks associated with
acquisitions, mergers and joint ventures; difficulties or delays in
manufacturing; and other risks and uncertainties listed in the
company’s filings with the Securities and Exchange Commission (the
“SEC”), including the company’s Form 10-K filed with the SEC on
Aug. 29, 2016, 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 these forward-looking statements to reflect
new information or events.
Western Digital, WD, the HGST logo, SanDisk and G-Technology are
registered trademarks or trademarks of Western Digital Corporation
or its affiliates in the U.S. and/or other countries. Other
trademarks, registered trademarks, and/or service marks, indicated
or otherwise, are the property of their respective owners.
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version on businesswire.com: http://www.businesswire.com/news/home/20160907005596/en/
Western Digital Corp.Investor Relations:Bob Blair,
949-672-7834robert.blair@wdc.comorMedia:Jim Pascoe,
408-717-5950jim.pascoe@wdc.com
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