by Anton Shilov
07/21/2010 | 04:26 PM
Western Digital has maintained its lead on the market of hard disk drives (HDDs) in the most recent quarter and outsold its arch-rival Seagate by 2.9 million HDDs. Nonetheless, revenues of Seagate are still substantially higher compared to WD thanks to better sales of enterprise-oriented hard drives.
Gap Widens: 49.7 Million Vs. 46.8 Million
For the fourth quarter of fiscal 2010 ended July 2, 2010, WD's revenue totaled $2.4 billion, hard drive unit shipments were 49.7 million and net income was $265 million, or $1.13 per share. The quarterly results included $27 million of expense related to litigation settlements. In the year-ago quarter, the company posted revenue of $1.9 billion, shipped 40.0 million hard drives, and reported net income and earnings per share of $196 million and $0.86, respectively. This included $5 million of income from the resolution of restructuring accruals and an $18 million gain on the sale of the company’s substrate manufacturing facility in Sarawak, Malaysia.
"Despite softer than anticipated June quarter demand, fiscal year 2010 was another year of significant growth and profitability for Western Digital. The long-term demand for low-cost, high-volume storage driven by the proliferation of data and content-hungry consumer and commercial devices remains strong,” said John Coyne, president and chief executive officer.
Seagate Technology said that in its fourth quarter FY2010 ended July 2, 2010 it sold 46.8 million disk drive units, thus, widening the gap with WD to 2.9 million units per quarter. The company reported revenue of $2.66 billion, gross margin of 27.4%, net income of $379 million and diluted earnings per share of $0.76. The financial results for the quarter include $6 million of purchased intangibles amortization expense, $16 million of restructuring charges, $3 million expense (Other income/expense) for the May 2010 termination of Seagate's revolving credit facility offset by a $6 million recovery of previously impaired long-lived assets and a $50 million income tax benefit due principally to valuation allowance adjustments related to deferred tax assets. The aggregate impact of these items was a $31 million increase to net income or approximately $0.06 per diluted share.
"Specific to our fiscal fourth quarter, two of our key assumptions entering the quarter did not materialize as expected and impacted our financial results – macro-economic stability and pricing reflective of balanced supply and demand. Industry demand in the fiscal fourth quarter was at the low end of our expectations due primarily to issues emanating from the debt crisis in Europe and slowing consumer spending especially in the U.S. and Europe. The lower unit shipments and unfavorable pricing at some key capacity points impacted Seagate's ability to deliver revenue and earnings for the quarter within our target range. Despite these factors, Seagate reported the highest operating results for a June quarter in the company's history," said Steve Luczo, said Seagate's chief exec, president and chairman.
Seagate Still Leads on Yearly Basis
On the yearly basis Seagate still has the unit shipments lead over Western Digital. Besides, Seagate's revenue and income are considerably higher compared to WD's.
For the fiscal year ended July 2, 2010 Seagate reported 193.2 million disk drive unit shipments, revenue of $11.4 billion, gross margin of 28.1%, net income of $1.61 billion and diluted earnings per share of $3.14. The financial results for the fiscal year ended July 2, 2010 include $35 million of purchased intangibles amortization expense, $66 million of restructuring costs, $3 million expense (Other income/expense) related to the May 2010 termination of the revolving credit line, a net write down of long-lived assets of $57 million offset by a $50 million income tax benefit due principally to valuation allowance adjustments related to deferred tax assets. The aggregate impact of these items was a $111 million reduction of net income or approximately $0.22 per diluted share.
For fiscal year 2010, the WD posted revenue of $9.8 billion and net income of $1.4 billion, or $5.93 per share, compared to revenue of $7.5 billion and net income of $470 million, or $2.08 per share, for the prior year. The 2010 net income included the $27 million of expense in the fiscal fourth quarter related to litigation settlements. The 2009 net income included a $14 million in-process research and development charge related to the acquisition of SiliconSystems, $112 million of restructuring charges with related tax benefits of $4 million, and an $18 million gain on the sale of the company’s substrate manufacturing facility.