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Western Digital laps Seagate

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Western Digital reported a stonking first 2010 quarter yesterday, with record revenues and unit shipments, passing Seagate in drive unit production numbers for the first time.

Revenues for the quarter were $2.6bn, 66 per cent up or a billion dollars higher than the year-ago quarter. Net income was $400m, a massive jump from the $50m earned a year ago. WD made 51.1 million hard drives, almost 20 million more than the year-ago quarter's 31.6 million. This was a 62 per cent increase year-on-year and three per cent sequentially.

Western Digital exceeded Seagate's 50.3 million units after a long quarterly catch-up in production number terms. Seagate is still bigger than WD in market capitalisation terms - $9.83bn vs $9.30bn - but that measure looks likely to swing the other way if WD sustains its unit production numbers lead and builds its enterprise hard drive market sales faster than Seagate.

CEO and president John Coyne said the overall demand for hard disk drives (HDD) in the quarter was higher than the firm anticipated, confirming the view that the storage recession is over. He's confident about the rest of the year, saying, "We believe that calendar year 2010 will be an extremely strong year for storage," and he expects next quarter's revenue to be in the range $2.48bn-$2.58bn.

Coyne is very pleased with WD being the largest shipper of hard drives in the world but says there's a long way to go to have the largest revenue in the HDD business.

In the earnings call, he said that WD is committed to broadening its enterprise HDD product line and building on its 10,000 SAS drive entry product - a multi-year endeavour.

He was asked if tablets like the iPad with their use of flash would affect the HDD industry and that PC manufacturers would move more to flash.

Coyne thought not - NAND flash has a limited supply and the bulk of it is going into smart mobile devices. These generate content and that has to be stored in bulk, which means on hard drives used in nearline storage and the cloud. He said: "As we look at the specs of some of the prospective tablets that are coming along, they will also have content generation capability. And we see it all as positive addition to the total infrastructural demand that’s going to drive our business into the future." ®

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