WD Announces Q1 Revenue of $2.1 Billion and Net Income of $211 Million, or 93 Cents...

WD Announces Q1 Revenue of $2.1 Billion and Net Income of $211 Million, or 93
Cents Per Share
Strong Profitable Year-over-Year Growth Continues: Revenue Up 19 Percent,
Units 34 Percent and Net Income 206 Percent

LAKE FOREST, Calif., Oct. 23 /PRNewswire-FirstCall/ -- Western Digital
Corp. (NYSE: WDC) today reported revenue of $2.1 billion, on shipments of
approximately 39.4 million units, with net income of $211 million, or
$0.93 per share, for its fiscal first quarter ending September 26, 2008. The
September quarter results represented strong year-over-year performance,
including growth in revenue and unit shipments of 19 percent and 34 percent,
respectively. In the year-ago quarter, the company reported revenue of
$1.8 billion, unit shipments of 29.4 million, and net income of $69 million,
or $0.31 per share. Net income in the year-ago period was reduced by charges
of $60 million for taxes related to the license of intellectual property to
subsidiaries and $49 million for in-process research and development related
to the acquisition of Komag.
The company shipped 14.6 million 2.5-inch drives for notebook PCs and
external storage, representing a sequential quarterly increase of 25 percent,
and 3.9 million 3.5-inch units for the PVR/DVR market in the first quarter, a
5 percent sequential decrease. On a year-over-year basis, these shipments
increased by 147 percent and 5 percent, respectively. Branded product revenue
of $383 million was essentially flat with the June quarter and up 19 percent
year-over-year. The company also continued to grow its shipments of
enterprise-class Serial ATA drives and hard drives featuring its unique
GreenPower(TM) technology into the desktop, enterprise and consumer
electronics markets.
The company generated $301 million in cash from operations during the
September quarter, ending with total cash and cash equivalents of
$1.2 billion.
John Coyne, WD president and chief executive officer, stated: "By
presenting customers with a compelling product set, being selective in market
and product mix, being responsive with availability and maintaining our focus
on quality, efficiency, cost and execution, we have again demonstrated the
strength of the WD business model and the WD team. This proven and disciplined
approach has repeatedly produced strong, profitable growth."
Reflecting its ongoing targeted R&D investment over the last several
years, the company commenced shipment of several new products during the first
quarter, including:
-- The WD Scorpio(R) Blue(TM) 2.5-inch hard drive family with capacities
up to 500 GB, extending WD's industry leadership in areal density for
standard form factor notebook hard drives;
-- The 500 GB 2.5-inch My Passport(TM) portable USB drives for easy to
use, portable storage of music, videos, photos and data files;
-- The second-generation WD Caviar(R) Green(TM) hard drives with
significantly improved power, efficiency and performance;
-- The WD ShareSpace(TM) high-speed network storage system that provides
up to 4 TB of cost-effective, centralized storage for small office and
home networks;
-- An expanded enterprise product line with the addition of high-capacity,
high-performance WD RE3 750 GB and 1 TB 3.5-inch SATA hard drives; and
-- The new backplane-compatible WD VelociRaptor(TM) hard drive, in both
3.5-inch and 2.5-inch form factors, the latest generation of the
company's 10,000 RPM SATA WD VelociRaptor(TM) series.

The investment community conference call to discuss these results and the
company's outlook will be broadcast live over the Internet today at
2 p.m. PDT/5 p.m. EDT. The call will be accessible live and on an archived
basis via the link below:
Audio Webcast: http://www.westerndigital.com/investor
Click on "Conference Calls"

Telephone Replay: 866-517-3736 (toll-free)
+1-203-369-2047 (international)

About WD
WD, one of the storage industry's pioneers and long-time leaders, provides
products and services for people and organizations that collect, manage and
use digital information. The company produces reliable, high-performance hard
drives that keep users' data accessible and secure from loss. WD applies its
storage expertise to consumer products for external, portable and shared
storage applications.
WD was founded in 1970. The company's storage products are marketed to
leading systems manufacturers, selected resellers and retailers under the
Western Digital and WD brand names. Visit the Investor section of the
company's Web site (http://www.westerndigital.com) to access a variety of
financial and investor information.
This press release contains forward-looking statements concerning the
strength of WD's business model and team, WD's ongoing targeted research and
development investment and WD's industry leadership in areal density for
2.5-inch hard drives. These forward-looking statements are based on WD's
current expectations and are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in the
forward-looking statements, including: the impact of current negative global
economic conditions; supply and demand conditions in the hard drive industry;
actions by competitors; unexpected advances in competing technologies;
uncertainties related to the development and introduction of products based on
new technologies and expansion into new hard drive markets; business
conditions and growth in the various hard drive markets; pricing trends and
fluctuations in average selling prices; changes in the availability and cost
of commodity materials and specialized product components that WD does not
make internally; negative impacts of the conditions in the global credit
markets on WD's investment portfolio; and other risks and uncertainties listed
in WD's recent Form 10-K filed with the SEC on August 20, 2008, to which your
attention is directed. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof, and
WD undertakes no obligation to update these forward-looking statements to
reflect subsequent events or circumstances.
Western Digital, WD, and the WD logo are registered trademarks of Western
Digital Technologies, Inc. in the U.S. and other countries. As used for
storage capacity, one gigabyte (GB) = one billion bytes, and one terabyte
(TB) = one trillion bytes. Total accessible capacity varies depending on
operating environment.

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions; unaudited)

Sept. 26, Jun. 27,
2008 2008

ASSETS

Current assets:
Cash and cash equivalents $1,213 $1,104
Short-term investments 2 3
Accounts receivable, net 1,082 1,010
Inventories 477 456
Other 174 158
Total current assets 2,948 2,731
Property and equipment, net 1,674 1,668
Goodwill 116 116
Other intangibles, net 78 81
Other assets 276 279
Total assets $5,092 $4,875

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable $1,215 $1,181
Accrued expenses 243 266
Accrued warranty 93 90
Current portion of long-term debt 45 27
Total current liabilities 1,596 1,564
Long-term debt 462 482
Other liabilities 147 133
Total liabilities 2,205 2,179
Shareholders' equity 2,887 2,696
Total liabilities and shareholders' equity $5,092 $4,875

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)
(unaudited)

Three Months Ended
Sept. 26, Sept. 28,
2008 2007

Revenue, net $2,109 $1,766
Cost of revenue 1,685 1,443
Gross margin 424 323
Operating expenses:
Research and development 133 91
Selling, general and administrative 57 48
Acquired in-process research and development - 49
Total operating expenses 190 188
Operating income 234 135
Net interest and other (4) 3
Income before income taxes 230 138
Income tax provision 19 69
Net income $211 $69

Net income per common share:

Basic $0.95 $0.31
Diluted $0.93 $0.31

Common shares used in computing per share amounts:

Basic 222 219

Diluted 226 224

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

Three Months Ended
Sept. 26, Sept. 28,
2008 2007
Cash flows from operating activities
Net income $211 $69
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 117 78
In-process research and development - 49
Deferred income taxes - 60
Stock-based compensation 10 8
Loss on investments 3 -
Changes in operating assets and liabilities (40) (45)
Net cash provided by operating activities 301 219
Cash flows from investing activities
Acquisitions, net of cash acquired - (911)
Capital expenditures (162) (163)
Investments, net 1 65
Net cash used in investing activities (161) (1,009)
Cash flows from financing activities
Acquisition-related debt, net - 750
Issuance of common stock under employee plans, net (1) 10
Repurchases of common stock (36) (16)
Tax benefit from employee stock plans 8 -
Repayment of long-term debt (2) (3)
Net cash provided by (used in) financing
activities (31) 741
Net increase (decrease) in cash and cash
equivalents 109 (49)
Cash and cash equivalents, beginning of period 1,104 700
Cash and cash equivalents, end of period $1,213 $651

(Logo: http://www.newscom.com/cgi-bin/prnh/20000711/WDCLOGO)

SOURCE Western Digital Corp.

Bob Blair, Investor Relations, +1-949-672-7834, robert.blair@wdc.com, or Steve
Shattuck, Public Relations, +1-949-672-7817, steve.shattuck@wdc.com, both of
Western Digital Corp.