Western Digital doubles last year’s profits

Western Digital has released the financial results for its fourth fiscal quarter of 2012, and it seems the hard drive maker has rebounded quite nicely from the Thailand flooding that put much of its manufacturing capacity underwater less than a year ago. WD raked in $4.7 billion for the quarter and $12.5 billion for its 2012 fiscal year, both substantial increases over the same periods in 2011. Net income was up, too. The company’s profits hit $1.6 billion for the year, more than doubling 2011’s net income.

Of course, Western Digital’s financial results now include more than just the sale of WD-branded products. Hitachi’s Storage division, which was acquired recently by WD, has been contributing to the bottom line since March 8. I suspect Hitachi is responsible for the more than doubling of enterprise-class drive shipments WD enjoyed in the past quarter.

Looking at the numbers (PDF), it’s interesting to note that WD has shipped more notebook drives than desktop models for two consecutive quarters. That comes after several years of desktop drives leading notebooks. The two categories weren’t even that close last quarter. WD shipped 21.2 million desktop drives and 32.8 million notebook models. There hasn’t been such a large delta between those two categories for years.

Another notable figure is WD’s gross margin, which has been over 30% for three quarters, or about since the Thailand flooding. In the first quarter of the 2012 fiscal year and through the entirety of 2011, WD’s gross margin hovered around just 20%. In fact, if you look at the financial results dating back to 2009, WD’s gross margin never exceeded 26%. No wonder folks are miffed hard drive warranties have been slashed and prices remain above pre-flood levels.

Comments closed
    • ronch
    • 7 years ago

    I wonder what Seagate’s figures will be once they come out. Somehow, I don’t think it’s impossible for these companies to bring prices down to pre-flood levels again, now that they’ve had enough time to put everything back in place. Price fixing, maybe?

    • Dposcorp
    • 7 years ago

    I agree with OneArmedScissor: “I find it seriously disappointing that there are all these knee jerk upvotes for a post full of so much blatant misinformation”

    Too many people are quick to jump on hard on WD and Seagate, but they arent the only manf, just the largest. There is still Samsung, Toshiba, and and who knows what else. No one jumps on Intel when they release a $1000 CPU, and they are AMD are the only two players.

    I harp on the makers for cutting warranties more then most, and I speak with my wallet; I dont try and spread false info.
    We all know how markets work, Supply and Demand, the floods, etc…

    Everyone just got spoiled when the market was over saturated with drives; same thing as with DDR3.
    Let a important factory or do go down, and then watch ram prices clime and more false info about price gouging be spewed.

    Yes, it happens sometimes, but don’t have a knee jerk reaction about it anytime prices rise, especially when a well documented natural disaster was to blame.

      • ronch
      • 7 years ago

      Except I believe they’ve got enough time to fix things by now and have few (if any) reasons to maintain HDD prices at their (still elevated) levels. Let’s see when Seagate’s numbers are out.

      Also, comparing the CPU industry to the HDD industry is not exactly an apples-to-apples comparison. In the CPU industry, performance is looked at all the time and it’s very critical. End up being 10% slower and you’d better price your product 10% lower too if you wanna offer the same price/performance ratio. In the HDD industry people tend to pick up a product based on capacity, price and brand. Not that they totally ignore performance, because they still do, but it’s not as critical as it is in the CPU industry. It’s also the fact that the performance levels of today’s mechanical hard drives are pretty much on the same league, and that’s partly the reason why people tend to ignore the benchmarks more often than when it comes to CPUs. Hence, since Intel has the stronger offerings nowadays, they naturally tend to price higher. I’m not defending Intel, it’s just how the CPU market works. And too bad AMD just can’t get back on its feet nowadays to keep Intel from pricing high, relatively speaking.

      As for RAM, I would totally understand if the market ‘bounces’ when an industry player goes out of business, slightly elevating prices for a while, but it equalizes back as the industry adjusts itself. They are, however, not immune to questionable tactics either. I remember not too long ago when a bunch of DRAM makers were penalized for price-fixing back in the turn of the century. I remember buying RAM at very high prices back then. Shame on them for that!

      So, going back to the original topic, I don’t think you can fault people for being too quick to slam WD and Seagate, and the other players as well (because Hitachi and Toshiba also followed with elevated prices even if they didn’t even have factories that were affected by the floods), especially since it’s been a while now since the floods and they’ve yet to bring prices back to pre-flood levels. It’s normal for people to think that there’s something funny going on.

      • ludi
      • 7 years ago

      Actually, Samsung sold their mechanical disk business to Seagate a while back. But that noted, I agree that the pre-flood prices and inventory looked suspiciously like an unsustainable glut. Besides that, SSDs are maybe two years away from taking over whatever is left of the consumer hard drive market once the tablet shake-out settles down. Once that happens nobody other than storage enthusiasts will care what the prices and warranties are, because nobody else in the general consumer market will be purchasing mechanical hard drives.

    • Bensam123
    • 7 years ago

    They most definitely suffered from a catastrophe, that’s why their profits rose… What do you guys think the odds are they entered into a pact with the only other HD manufacturer in existence and decided they would reap profits from this till SSDs take over completely? >>

    Who needs to be innovative when you own everything?!?!

    • Deanjo
    • 7 years ago

    And to think that when I posted that they were artificially inflating the prices after the floods I was thumbed down into oblivion….

    • trackerben
    • 7 years ago

    No corporation or cartel can demand high tariffs if there isn’t a correspondingly great demand for their stuff in the first place. That domain is normally the preserve of governments and sovereign-owned-and-controlled corporations.

      • OneArmedScissor
      • 7 years ago

      Nobody complaining actually read that PDF. Notebook sales are up, enterprise sales doubled, and desktop sales dropped.

    • jdaven
    • 7 years ago

    So the only spinning HD companies left are Seagate, WD and Toshiba. Any bets on whether Seagate or WD gets Toshiba?

      • DeadOfKnight
      • 7 years ago

      No, you always need that third name nobody cares about.

        • Meadows
        • 7 years ago

        Aha! Finally somebody explained VIA.

          • ronch
          • 7 years ago

          Both you DeadofKnight and Meadows get +1 from me. Sorry Jdaven, better luck next time.

            • Mourmain
            • 7 years ago

            The Ronch Olympics are tough.

            • UberGerbil
            • 7 years ago

            Second prize is a set of steak knives

            • squeeb
            • 7 years ago

            I know what the third prize is.

          • trackerben
          • 7 years ago

          The Phantom Menace?

    • Frith
    • 7 years ago

    The EU should be investigating the hard disk industry rather than optical drive manufacturers. Western Digital and Seagate appear to be acting as a cartel in order to artificially raise prices, reduce R&D spending and reduce warranty costs.

    In a competitive market, such as the LCD or automotive industries, if a company suffered major damage to its manufacturing facilities it would lead to them losing profits and market share. When a catastrophe leads to a company doubling its profits something is very wrong.

      • MadManOriginal
      • 7 years ago

      This catastrophe is at least a little different than others in that it severely affected the [i<]entire[/i<] HDD industry. Not that things don't seem a bit fishy anyway, but it's not like this should be compared to a natural disaster that affects maybe 10% of an industry or just one company.

        • halbhh2
        • 7 years ago

        Exactly right, but…doesn’t it seem like they should have recovered from the flood enough that HD prices should only be maybe 10% more than before the flood (due to currency moves)?

      • OneArmedScissor
      • 7 years ago

      I find it seriously disappointing that there are all these knee jerk upvotes for a post full of so much blatant misinformation.

      [quote<]artificially raise prices[/quote<] How can it be artificial if people choose to buy it or not? [quote<]reduce R&D spending[/quote<] Their R&D spending is up about 50%! [quote<]reduce warranty costs[/quote<] Some drives have 5 year warranties, some don't. Your choice. [quote<]In a competitive market[/quote<] ...the industry doesn't collapse down to a two man race. [quote<]When a catastrophe leads to a company doubling its profits something is very wrong.[/quote<] It didn't. They were not making so much until just recently, and it dropped considerably before that. Look at the quarter by quarter sales and profits. What is troubling is that the prevailing mentality here seems to be in favor of government intervention in technology. And yet, the same people will turn around and complain about how broken the patent system is. You are asking for more of the same, and the world would just slow down even more.

        • BobbinThreadbare
        • 7 years ago

        “How can it be artificial if people choose to buy it or not?”

        Because they colluded with their only other competitor so that no one could buy a similar product for cheaper.

        • rrr
        • 7 years ago

        Prevailing mentality is that you shouldn’t pay more to get less. And that’s exactly what’s going on with HDDs.

      • trackerben
      • 7 years ago

      That was a supply shock, and those swans come unexpectedly in black. Similar to what happened in the 1970s, when many Arab producers threatened a supply falloff to Western countries over their infidel support for Israel in Yom Kippur. First came the price surges, then government rationing to match undersupply, followed by long years of economic stagnation as a result of restructured terms of oil trade in favor of oil cartels and state exporters. It took almost a decade for traditional oil companies and sovereign buyers to regain their lost bargaining power with OPEC. Note that crude oil shipments are a broadly-sourced commodity, magnetic storage production is less resilient to point disruptions.

    • Chaseme
    • 7 years ago

    Industries that lie to inflate pricing for massive profits:
    – Oil and Gas
    – Medical/Pharma
    – Hard Disk…WHAT!

    Never would of imagined.

      • Meadows
      • 7 years ago

      [b<]would [i<]have[/i<][/b<]

        • lilbuddhaman
        • 7 years ago

        [i<]woulda[/i<]

          • derFunkenstein
          • 7 years ago

          would’ve

          • BobbinThreadbare
          • 7 years ago

          coulda shoulda

            • Chandalen
            • 7 years ago

            I always heard it as shoulda coulda woulda, but minor gripe.

          • Srsly_Bro
          • 7 years ago

          wooda

            • BloodSoul
            • 7 years ago

            didn’t

      • cynan
      • 7 years ago

      On point. But your post can be summarized in a single bullet point:

      -every single industry that can get away with it

      • ch┬Áck
      • 7 years ago

      trolling is a art

      • ronch
      • 7 years ago

      I scoffed at the claims of big pharma companies that it takes $800M to develop, test and market a drug. Just an excuse to rip sick people off! Industry insiders say it’s more like $100M – $200M.

      Edit – I keep forgetting the M’s (millions)! I’m getting careless…

        • ludi
        • 7 years ago

        Your “industry insiders” must be talking about only the cost of drugs that make it to market. The total cost is a function of all money spent, which includes a lot of false starts that sometimes string out for five or ten years before an unresolvable failure mechanism trashes what appeared to be a promising research line.

          • lilbuddhaman
          • 7 years ago

          Yeah ok. While my local NON-PROFIT hospital is forced to cut employees due to rising costs (as well as less and less money from state/federal aid), those companies are growing bigger and bigger with record profits. Then with their massive influence, they lobby themselves into even better position so that they don’t get “left behind” in the money grab from the next big legislation in healthcare.

          [url<]http://www.gsk.com/investors/quarterly_results.htm[/url<] [url<]http://www.roche.com/annual_reports.htm[/url<] [url<]http://www.abbott.com/news-media/press-releases/2012-january25.htm[/url<] [url<]http://www.pfizer.com/files/investors/presentations/q1performance_050112.pdf[/url<] [url<]http://en.wikipedia.org/wiki/Pharmaceutical_lobby[/url<] [quote<] he top twenty pharmaceutical companies and their two trade groups, Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Industry Organization, lobbied on at least 1,600 pieces of legislation between 1998 and 2004. According to the non-partisan Center for Responsive Politics, pharmaceutical companies spent $900 million on lobbying between 1998 and 2005, more than any other industry. During the same period, they donated $89.9 million to federal candidates and political parties, giving approximately three times as much to Republicans as to Democrats.[1] According to the Center for Public Integrity, from January 2005 through June 2006 alone, the pharmaceutical industry spent approximately $182 million on Federal lobbying.[2] The industry has 1,274 registered lobbyists in Washington D.C. [3] [/quote<]

            • trackerben
            • 7 years ago

            The main difference between Socialism and Nationalist-Socialism is that in the former, the elite eventually run out of their people’s wealth, while in the later the elite eventually run after other nations’ wealth.

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