Western Digital Corporation (NASDAQ:WDC) Q2 2015 Earnings Conference Call - Final Transcript

Jan 27, 2015 • 06:00 pm ET


Western Digital Corporation (NASDAQ:WDC) Q2 2015 Earnings Conference Call - Final Transcript


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Good afternoon and thank you for standing by. Welcome to Western Digital's Second Quarter Financial Results for Fiscal Year 2015. Presently all participants are in a listen only mode, later we will conduct a question and answer session. (Operator Instructions). As a reminder, this call is being recorded. Now I will turn the call over to Mr. Bob Blair.

Robert Blair

Thank you.

(Forward-Looking Cautionary Statements)

We ask the participants to limit their comments during the Q&A session to a single opening question and one follow-up question. I also want to note the copies of remarks from today's call by Steve Milligan and Olivier Leonetti will be available on the Investors section of Western Digital's website immediately following the conclusion of this call.

And now I'd like to turn the call over to President and CEO, Steve Milligan.

Steve Milligan

Good afternoon and thank you for joining us. After my opening remarks, Olivier Leonetti will provide additional commentary on our December quarter performance and our outlook for the March quarter.

Unidentified Speaker

I am pleased with our financial results in the December quarter. We achieved strong revenue, gross margin and earnings performance. We also generated significant cash flow from operations in the quarter excluding the impact of the Seagate arbitration award. The diversified nature of our business together with ongoing secular growth in data and crisp execution by HGST and WD subsidiaries continues to enable us to consistently deliver strong financial performance.

Market dynamics in the December quarter were in line with our expectations. In our business we saw particular strength and demand for capacity enterprise and video surveillance hard drives and for enterprise SSDs. As anticipated there was a seasonal demand uptick for branded products. We expect ongoing hyper-scale cloud deployments coupled with our expanding product portfolio and customer engagement model to continue fuelling our growth and capacity enterprise for the foreseeable future.

Terabyte growth in this category is expected to remain strong. Our flash platform solution business which includes our expanding portfolio of enterprise class SSDs maintained its growth trajectory in the quarter delivering revenue of $187 million. The demand outlook for the March quarter reflects a normal seasonal decline with moderation in client, branded products and performance enterprise with stable demand and capacity enterprise.

We believe overall supply and demand and associated inventory levels remain balanced. I continue to be encouraged by the ongoing stabilization of the PC market where demand has been in line with our expectations. Furthermore, I am encouraged by the market's response to our strategic growth initiative, which we believe position in the company to thrive in the evolving data storage ecosystem.

We've strengthened our value proposition by enhancing our technical expertise, expanding our product portfolio and investing in our go-to-market capabilities. We will continue to prudently evaluate investment opportunities to advance these initiatives. We gain traction in key markets during the December quarter. Our broad line-up of high-capacity hard drives, including those

Unidentified Speaker

based on our proprietary HelioSeal platform continued to be embraced by both traditional enterprise and hyper scale