Feeds

WD: Enjoying our $630m, Seagate? Let's ruin your day with our results

More profitable platters put Western Digital in the lead

Gartner critical capabilities for enterprise endpoint backup

It might still be smarting from the $630m it just doled out to Seagate, but WD widened the gap between itself and its arch competitor with its fourth quarter and full year results.

Overall, the world's biggest HDD maker sold more drives more profitably - and coped with the PC downturn better.

Revenues for WD's fourth financial 2013 quarter, which ended on 28 June, were $3.73bn, down a smidge on the preceding quarter's 43.76bn, and down a lot, 22 per cent, on the year-ago fourth quarter.

Profits were $416m, up $25m on the third quarter, but down 44 per cent on the year-ago quarter, when it built more drives - 71 million compared to 59.9 million - and made more profit from them* ($10.49 then versus $6.94 now).

The Thai flood shortage effect had been driving up prices last year. But this quarter's profit/drive number is better than Seagate's.

WD Quarterly revenues to Q4 fy2013

Looking at Seagate's fourth quarter figures, it built 53.9 million drives and made $6.46 profit from each one, less than WD. In the previous quarter it made $7.47 profit/drive and $8.42 in the one before that; the trend is downwards. WD made $6.50 profit/drive in its previous quarter and $5.66 in the one before that; its trend is upwards.

Comparing Seagate and WD quarterly revenue history, we see both declining in the latest quarter but WD declining less and thereby widening the revenue gap between it and Seagate.

WD and SEagate quarterly revenue history

Full 2013 revenues were $15.4bn, up a solid 23 per cent on the previous year's 12.5bn.

WD Annual Revenues to fy2013

Management patted itself on the back, with CEO and president Steve Milligan saying in the earnings call: "I am pleased with our performance in fiscal year 2013 and the June quarter."

The PC disk drive market was flattish. It may grow as we approach the end of year period, but WD hasn't made any bets on yet.

CFO Wolfgang Nickl said: "Performance enterprise is stable, but not up. Capacity enterprise, up. And like we said before, that segment of the market that we think for the next 5, 6, 7 years, has the strongest growth. And we said before that we wouldn't be surprised if that would be double digit."

p>So WD expects capacity-optimised enterprise disk drives to be a boom area, and their HGST is sitting with its capacity-enhancing helium disk drive technology ready top rock and roll. We expect a 7-platter helium drive to appear later this year.

The CEO said: "We're currently sampling these products with selected customers right now, or that product with selected customers. And we continue to expect that we will have units shipped and revenue realised before the end of the calendar year."

Milligan said WD sees the enterprise market being squeezed between SSDs at the high-end taking on a performance role and nearline drives at the low-end taking on a capacity role: "The traditional enterprise business, we do not view as a growth business. It's fairly stable in terms of its demand, which is great, which is fine. But the growth areas in terms of enterprise are in the capacity enterprise market, and then also we believe in enterprise class solid-state drives."

In passing, Nickl observed that, in Europe, WD is seeing an "ongoing move there to NAS boxes away from direct attached" storage.

As expected, WD has appealed against the $630m plus interest arbitration award to Seagate for trade secrets theft. If it had to cough up the cash it would use money from its off-shore accounts to do so.

Out of interest we calculated WD's average drive price** trend over the past few quarters:

WD average drive price trend

WD's average disk price is still well above the levels seen before the Thai flood and gently declining. The three main manufacturers - Seagate, Toshiba and WD - are certainly not engaged in any great price-led competition.

Finally, WD expects revenues of $3.7bn - $3.8bn in its next quarter, contrasting with Seagate yet again; it expects revenues of $3.5bn-$3.6bn. ®

* Profit per drive is calculated by dividing GAAP net income by the number of drives manufactured.

p>** The average disk drive price is calculated by dividing quarterly revenues by the number of drives manufactured in the quarter.

®

Secure remote control for conventional and virtual desktops

More from The Register

next story
The Return of BSOD: Does ANYONE trust Microsoft patches?
Sysadmins, you're either fighting fires or seen as incompetents now
Microsoft: Azure isn't ready for biz-critical apps … yet
Microsoft will move its own IT to the cloud to avoid $200m server bill
Oracle reveals 32-core, 10 BEEELLION-transistor SPARC M7
New chip scales to 1024 cores, 8192 threads 64 TB RAM, at speeds over 3.6GHz
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
Object storage bods Exablox: RAID is dead, baby. RAID is dead
Bring your own disks to its object appliances
Nimble's latest mutants GORGE themselves on unlucky forerunners
Crossing Sandy Bridges without stopping for breath
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.