Western Digital Management Discusses Q4 2012 Results - Earnings Call Transcript

In formulating our outlook for fiscal 2013, which we will share with you today, we considered many factors: We took into account several broad trends such as the soft macroeconomic environment, the growing use of tablets and smartphones and a modest expectation for the initial acceptance of Windows 8 and Ultrabooks. Consequently, our planning assumption for unit growth and hard-drive demand is a 5%.

We considered several Western Digital specific factors: First, due to the regulatory requirements to operate WD and HGST as separate subsidiaries for at least 2 years, we do not expect any significant OpEx synergies in that timeframe; second, our experience since completing the HGST acquisition has demonstrated customers' continued appreciation of the respective strengths of our WD and HGST subsidiaries; third, following 4 months of experience, we have confirmed the robustness and predictability of the HGST's business operations, processes and controls; fourth, each subsidiary has multiple opportunities to further improve its cost structure, by ramping newer areal density platforms throughout the fiscal year and by making continued progress on cost optimization and the recovery from flood-related cost issues.

Taking all these into account, we believe that Western Digital can deliver non-GAAP earnings per share of $10 in fiscal '13.

Storage continues to be at the center of the evolving digital universe: In entertainment, education, commerce and communication. WD and HGST continue to focus on serving this market with a broad and expanding portfolio of products. We believe a strategy of delighting customers, focusing investments in faster growing market segments and driving strong execution in both internal operations and our supply chain will continue to deliver consistent and superior financial performance.

Steve Milligan will now cover the operational highlights of our Q4 performance. Steve?

Stephen D. Milligan

Thanks, John. When we announced the acquisition of HGST in March 2011, we emphasized the potential for strong financial returns. We believe the consolidated June quarter financial results provide a compelling early proof point.

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