Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Western Digital Outlook 'Uglier Than Expected'

Stock Markets Aug 05, 2022 03:26PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters Western Digital (WDC) Outlook 'Uglier Than Expected'

By Sam Boughedda

Western Digital (NASDAQ:WDC) shares hit a low of $45.04 on Friday after the company posted fiscal fourth-quarter earnings missing revenue expectations.

The computer hard disk drive manufacturer reported earnings of $1.78 per share, $0.04 better than the analyst estimate of $1.74. However, revenue for the quarter came in at $4.53 billion versus the consensus estimate of $4.58 billion.

Overall, revenue declined 8% year-over-year. Cloud revenue increased 5%, client revenue declined 14%, and consumer revenue declined 23% year-over-year.

"I am proud of our team for driving strong fiscal year 2022 performance, during which revenue grew 11% and non-GAAP EPS increased 81%, demonstrating progress in unlocking the earnings potential of our business," said David Goeckeler, Western Digital CEO.

While the company missed revenue estimates, it was its guidance that disappointed investors, with fiscal first quarter 2023 EPS expected to be between $0.35 and $0.65, versus the consensus of $1.96. In addition, Western Digital sees revenue for the period between $3.6 Billion and $3.8 billion, versus the consensus of $4.74 billion

Following the announcement, a Rosenblatt Securities analyst maintained a Neutral rating on the stock but lowered the firm's price target to $45 from $60 per share.

"Following an in-line June quarter, management pointed to a sudden drop-off in orders as PC, smartphone and retail customers made plans to reduce inventory. This led to management’s guidance missing consensus estimates by a very wide margin. This is hopefully a steep inventory adjustment and demand can resume in the out quarters. The lingering problem, in our view, will be that once NAND Flash ASPs are brought down much faster than cost reduction, it takes many quarters before gross margins can recover, particularly during an over supplied market. We are modeling a gradual demand recovery though maintaining our Hold rating on the WDC shares," said the analyst.

Elsewhere, a Stifel analyst, who has a Buy rating on the stock, said the near-term outlook was "uglier than expected."

"On Friday morning, Western Digital (WDC, Buy, $49.91) reported 4Q22 (June) earnings results of $4.53 billion in revenue and pro forma EPS of $1.78, excluding options, slightly below our revenue forecast of $4.6 billion but above our pro forma EPS forecast of $1.74. We believe the results are quite impressive, given the changing market environment that evolved during the quarter. In particular, the company delivered solid gross margins (32.3% pro forma, above our expectation of 31.9%), which helped deliver the modest upside to EPS."

Western Digital Outlook 'Uglier Than Expected'
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Klaus Mittwoch
Klaus Mittwoch Aug 05, 2022 5:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hard Drives and SSD are and was so expensive for many years that it is no surprise.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email