Tech & AI
Western Digital beats forecasts as revenue jumps 55% and guides next quarter to about $5.1 billion
The hard-drive maker topped profit and sales estimates, lifted its dividend 17% and forecast gross margin of 60% to 61%.
HedgeWeekly Tech & AI Desk ·
Western Digital said on October 22 that revenue for its fiscal first quarter, which ended October 2, rose 55% from a year earlier to $4.38 billion. Adjusted earnings were $4.64 a share, against $4.63 on a GAAP basis. Analysts had expected about $4.08 a share on revenue of roughly $4.14 billion, according to consensus figures compiled by 24/7 Wall St. and TheStreet.
The company said margins expanded. Gross margin was 57.8% under standard accounting and 58.1% on an adjusted basis. The company makes hard disk drives, the spinning magnetic storage that still holds most of the data kept in large cloud data centres. Chief executive Irving Tan pointed to solid customer demand and better visibility into future orders. The company bought back about $1 billion of its own shares during the quarter.
For the quarter ending in December, Western Digital forecast revenue of $5.1 billion, plus or minus $100 million, which would be 66% to 72% above a year earlier. It guided adjusted gross margin of 60% to 61% and adjusted earnings of $5.80 a share, plus or minus 20 cents. The board raised the quarterly dividend 17% to 17.5 cents a share, payable on December 17 to holders of record on December 4.
Why it matters: Rising storage demand from AI has turned hard drives, long seen as a slow-growth commodity business, into one of the strongest earnings stories in hardware. A margin outlook above 60% suggests prices are still firm, which also matters for rival Seagate. The results came after a session in which chip stocks fell sharply on doubts over AI spending, so investors will watch whether storage orders hold up if cloud groups slow their budgets, and whether the company commits more cash to buybacks.