Western Digital Earnings Preview: Enterprise and SSD Storage To Drive Quarter

Jan 21 2014, 2:24pm CST | by

Western Digital Earnings Preview: Enterprise and SSD Storage To Drive Quarter

Western Digital Corporation, a leading manufacturer of electronic storage products for personal storage and enterprise applications, will announce its Q2 fiscal 2014 earnings on January 22. With an industry-wide decline in both the number of PC storage units shipped and the average selling price of PC units, the company expects revenues to remain flat over the previous quarter.

Amid weak results from the core PC storage business, Western Digital expects the next few quarters to be driven by enterprise and cloud storage. Additionally, solid state drives are increasingly becoming crucial for storage companies due to a greater demand for high performance drives in data centers and enterprise storage units. In an attempt to boost its solid state drive offerings, the company acquired a number of companies including sTec, Velobit and Virident last year. On the back of these acquisitions and a increasing mix of high-margin enterprise and non-computing units shipped, WDC’s stock price nearly doubled in 2013. We have a $80 price estimate for Western Digital, which is slightly below the market price.

See Our Full Analysis On Western Digital

Enterprise And Non-Compute Segments To Perform

The data storage demand from enterprises and data centers has been increasing due to growing Big Data and digital content. In the previous quarter, WDC shipped almost 8 million enterprise storage units, a 25% increase from the same period in 2012. The company’s management forecasts data requirements to grow at 34% CAGR through 2020, with the trend shifting from personal storage towards enterprise and cloud storage.

In the last quarter, 53% of the company’s revenues were generated by non-PC units that include enterprise storage units and personal storage units for TVs, DVRs and gaming consoles, despite the fact that only 35% of the units shipped were non-PC units. The shift away from desktop and laptop storage could help the company to improve overall margins since enterprise storage units have higher margins than PC storage units.

Western Digital’s fastest-growing individual segment is the enterprise SSD division, which witnessed 50% year-over-year growth in revenues in the previous quarter. Although it contributed only $106 million to the top line, the company expects the figure to become more prominent in the coming quarters. High-performance solid state drives are the key to generating high margins for storage companies over the next few quarters. SSD technology is at a stage where consumers can benefit from SSDs with few cheaper alternatives available that match them in performance. In the long run, WDC will look to explore cheaper alternatives to SSDs like its competitor Seagate, as well as new technologies for enterprise and cloud storage. But in the near future, storage companies are likely to capitalize on the high-margin solid state storage drives.

Submit a Post at Trefis Powered by Data and Interactive Charts| Understand What Drives a Stock at Trefis

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

US reporter requests privacy after release
Washington, Aug 28 (IANS/EFE) The US journalist, who was freed this week by the miltants in Syria after two years in captivity, Wednesday thanked everyone for their efforts to secure his release and asked for privacy to be with his family.
 
 
Congo confirms six Ebola cases
Brazzaville, Aug 28 (IANS) Six cases of the Ebola virus have been confirmed in Democratic Republic of Congo (DRC), Health Minister Felix Kabange Numbi said Wednesday.
 
 
IMF chief faces investigation in corruption case
Paris, Aug 27 (IANS/EFE) International Monetary Fund (IMF) chief Christine Lagarde has been put under investigation in France for "negligence" after being questioned for hours in a corruption case, judicial sources said Wednesday. She denied wrongdoing.
 
 
Whale tourism affecting marine animals' behaviour
London, Aug 27 (IANS) Boat trips to watch whales and dolphins may increasingly put the survival of marine mammals at risk, conservationists have warned.
 
 
 

Latest from the Network

Most people take my clothes too seriously: Rick Owens
Los Angeles, Aug 28 (IANS) American fashion designer Rick Owens believes his fans takes his designs too seriously. The California-born designer, known for his statement drop-crotch shorts and leather jackets, believes...
Read more on Celebrity Balla
 
US reporter requests privacy after release
Washington, Aug 28 (IANS/EFE) The US journalist, who was freed this week by the miltants in Syria after two years in captivity, Wednesday thanked everyone for their efforts to secure his release and asked for privacy...
Read more on Ad Balla
 
Chris Martin writes love songs about Jennifer Lawrence
Chris Martin is ''sweeping'' Jennifer Lawrence ''off her feet.'' The Coldplay frontman, who split from Gwyneth Paltrow in March after 10 years of marriage, has reportedly been pulling out all the stops to romance 'The...
Read more on Celebrity Balla
 
Neil Young will continue to support ailing son
Neil Young and Pegi Young will continue to co-parent their ailing adult son. The 68-year-old 'Heart of Gold' hitmaker, who filed for divorce from the 61-year-old singer last month after 36-years of marriage, stated in...
Read more on Celebrity Balla
 
Dating actresses best for Daniel Radcliffe
London, Aug 28 (IANS) Actor Daniel Radcliffe says dating actresses works well for him as they understand the demands of the industry. The "Harry Potter" actor is currently in a relationship with his "Kill Your...
Read more on Celebrity Balla
 
Egypt accuses Morsi of leaking documents to Qatar
Cairo, Aug 28 (IANS) The Egyptian prosecution ordered Wednesday to temporarily detain former Islamist president Mohamed Morsi for 15 days on charges of leaking "national security documents" to Qatar, media reported....
Read more on Politics Balla
 
Poland sends humanitarian aid for Ukrainian soldiers
Warsaw, Aug 28 (IANS) The Polish National Defence Ministry said Wednesday humanitarian aid for Ukrainian troops is already on its way. Poland will provide around 320 tonnes of relief supplies, including food, blankets...
Read more on Politics Balla
 
Child abuse: British police commissioner's resignation demanded
London, Aug 28 (IANS) Police commissioner of the British metropolitan county of South Yorkshire has come under fire from various quarters after an inquiry exposed shockingly child sexual abuses. Leaders from different...
Read more on Politics Balla
 
UN Security Council urges for immediate ceasefire in Libya
United Nations, Aug 28 (IANS) The UN Security Council Wednesday adopted a resolution on Libya, calling for an immediate ceasefire while expanding sanctions on those who involved in the violence there. The 15-member...
Read more on Politics Balla
 
Cara Delevingne to star in 'Zoolander' sequel?
Los Angeles, Aug 28 (IANS) Model Cara Delevingne may star in the upcoming "Zoolander" follow-up alongside Ben Stiller. The 22-year-old model is said to be negotiating with the movies' star, Stiller, over the female...
Read more on Celebrity Balla