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Western Digital buoyed by improving flash market
Data storage company Western Digital Corp. benefited from an improving flash market and stronger demand for its hard drives to deliver second-quarter financial results today that topped Wall Street’s expectations.
The company reported a profit before certain costs such as stock compensation of 62 cents per share on revenue of $4.23 billion. Wall Street was looking for earnings of 58 cents per share on slightly lower revenue of $4.22 billion.
More important, perhaps, Western Digital reported a net loss of $139 million for the quarter, which is a big improvement from the same period a year ago, when it posted a $487 million net loss.
Western Digital had given shareholders the jitters three months ago when it announced during its fiscal first-quarter 2020 results that Chief Executive Officer Steve Milligan (pictured) is planning to step down from the role by September 2020. The company has been searching for his successor ever since, and although there was no update on that hunt, investors’ nerves appear to have been calmed anyway by today’s positive results. The company’s stock rose more than 7% in after-hours trading.
The positive reaction may have had something to do with the company’s guidance for the next quarter. Executives said they’re projecting third-quarter revenue of $4.1 billion to $4.3 billion, with a profit of 85 cents to $1.05 per share. Wall Street had earlier forecast revenue of $4.06 billion and a profit of 73 cents.
“The December quarter results reflect strong execution in our product roadmap, success in increasing our hard drive gross margin, and an improving flash market,” Milligan said in a statement. “We expect an accelerated recovery in our flash gross margins, which coupled with ongoing strength in demand for both hard drives and flash, positions us well for continued profitable growth in calendar year 2020.”
Officials added in a conference call that the company generated $257 million in cash from its operations during the quarter. It ended the three-month period with $3.1 billion in total cash and equivalents.
Photo: Fortune Live Media/Flickr
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