Western Digital Corp Earnings: Profit Falls Behind Revenue Decline

S&P 500 (NYSE:SPY) component Western Digital Corporation (NYSE:WDC) posted a decrease in profit as revenue declined. Western Digital designs, develops, manufactures, and sells hard drives.

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Western Digital Earnings Cheat Sheet for the Second Quarter.

Results: Net income for the data storage devices company fell to $145 million (61 cents per share) vs. $225 million (96 cents per share) a year earlier. This is a decline of 35.6% from the year earlier quarter.

Revenue: Fell 19.2% to $2 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: WDC reported adjusted net income of $1.51 per share. By that measure, the company beat the mean estimate of 72 cents per share. It beat the average revenue estimate of $1.84 billion.

Quoting Management: “We have made substantial progress in restoring WD’s manufacturing capabilities in the aftermath of the historic flooding in Thailand, and this is reflected in our second quarter financial results and in the resumption of our operations there,” said John Coyne, president and chief executive officer. “While much work remains to be done over the next several quarters to reach our pre-flood manufacturing capabilities, the progress thus far is significantly ahead of our original expectations and is a tribute to the dedicated and effective actions of our employees, contractors and Thai government agencies, the efforts of our supply partners and the support of our customers. We are grateful to all involved in this extraordinary effort.”

Key Stats:

A year-over-year revenue decrease last quarter snaps a streak of two consecutive quarters of revenue increases. Revenue rose 12.4% in the first quarter and 0.9% in the fourth quarter of the last fiscal year.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with net income of $1.10 versus a mean estimate of net income of 95 cents per share.

Net income has dropped 33.1% year over year on average across the last five quarters. Performance was hurt by a 63.5% decline in the third quarter of the last fiscal year from the year earlier quarter.

Looking Forward: Analysts appear increasingly positive about the company’s results for the next quarter. The average estimate for the third quarter has moved up from a loss of $1.17 a share to a profit of 94 cents over the last sixty days. For the fiscal year, the average estimate has moved up from a loss of $1.62 a share to a profit of $4.20 over the last ninety days.

Competitors to Watch: Seagate Technology PLC (NASDAQ:STX), EMC Corporation (NYSE:EMC), STEC, Inc. (NASDAQ:STEC), SanDisk Corporation (NASDAQ:SNDK), Dot Hill Systems Corp. (NASDAQ:HILL), Overland Storage, Inc. (NASDAQ:OVRL), Hutchinson Technology Inc. (NASDAQ:HTCH), Quantum Corporation (NYSE:QTM), ADPT Corporation (ADPT), and OCZ Technology Group Inc. (NASDAQ:OCZ).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com