Western Digital Stock Is Slipping. Earnings Were a Blowout.

For the June quarter, Western Digital posted gross of $4.9 billion, up 19% from a twelvemonth ago, and good supra the Street statement forecast astatine $4.5 billion. The shaper of disk drives and flash representation posted non-GAAP profits of $2.16 a share, up of the Street estimation for $1.49 a stock and up from $1.02 a stock a twelvemonth earlier.

Under mostly accepted accounting principles, the institution earned $1.97 a share, up from 63 cents a twelvemonth earlier. Non-GAAP gross borderline expanded to 32.9% from 27.7% a twelvemonth earlier, connected stronger pricing.

The institution said client-devices gross was up 13% from a twelvemonth ago, and 8% sequentially, to $2.2 billion, driven by strong request for notebook and desktop hard drives. Data-center devices’ gross totaled $1.8 billion, up 6% from a twelvemonth agone and 44% higher than the March quarter, arsenic endeavor request picked up. Client solutions gross was $977 million, up 42% from a twelvemonth ago, and 10% sequentially, arsenic add-on retention products sold done retail and different channels increased.

For the September quarter, Western Digital sees gross ranging from $4.9 cardinal to $5.1 billion, with non-GAAP profits of $2.25 to $2.55 a share, and non-GAAP gross borderline expanding 33% to 35%. Street statement had called for $4.9 billon successful gross and profits of $2 a share.

“I americium highly arrogant of the outstanding execution our squad exhibited arsenic we achieved different 4th of beardown revenue, gross borderline and EPS results supra expectations,” CEO David Goeckeler said successful a statement. “Throughout this fiscal year, we successfully delivered some flash and hard thrust innovations that are indispensable gathering blocks successful the acceleration of the information economy…. We judge we person the close instauration for success—the close products, the close lawsuit base, and the unsocial quality to code 2 precise ample and increasing markets.”

In an interrogation with Barron’s, Goeckeler noted that the institution has reached a afloat rollout of its energy-assisted 18 terabyte drives, which person been enthusiastically received by unreality customers successful particular. He said that the institution saw 49% sequential maturation successful unreality storage, and that the drives person been adopted by “all of the largest data-center operators successful the world.”

The institution besides saw beardown request for flash-based solid-state drives utilized by unreality customers, with 39% sequential maturation successful that business.

Goeckeler said that “blended” flash representation pricing was up astir 7% sequentially, reflecting continued choky supply. And helium said that mean pricing besides improved successful the hard-drive business, aided by accrued request for larger drives with higher margins.

The CEO added that the further request from cryptocurrency farmers the institution saw 1 4th agone has moderated, but that the institution is monitoring the concern closely. More important request drivers, helium said, see proceed beardown income to unreality customers and accrued enactment from endeavor customers for on-premises applications arsenic offices commencement to reopen and IT spending picks up.

Meanwhile, Goeckeler said that logistics costs person trimmed gross margins by 1.2 to 1.3 percent points, reflecting some higher shipping costs and immoderate parts shortages. He said the institution astir apt could person shipped much products if it had much parts.

Write to Eric J. Savitz astatine eric.savitz@barrons.com