HITS

Continued growth in cloud computing and mobility, combined with “continued strong demand” for Western Digital (WD) NAND flash memory, helped give the company a lift in its third quarter (ended March 3), according to CEO Steve Milligan.

“Macroeconomic conditions remained supportive in the quarter, with cloud computing and mobility serving as primary demand drivers,” he said April 26 on an earnings call with analysts. “The positive third quarter dynamics included continued strong demand for our NAND flash products,” he said.

WD, which includes the G-Technology, HGST and SanDisk brands, continues to “pursue a long-term value creation strategy underpinned by secular growth in big data and fast data applications,” he noted, adding: “Rapid advancements in artificial intelligence, machine learning and IoT [Internet of Things] applications are fueling creation of valuable data at an unprecedented pace.”

The number of connected devices globally is expected to increase from 9 billion now to “upwards of 75 billion by 2025,” he predicted, saying that “exponential growth will require robust storage infrastructures and purpose-built solutions that allow users to capture, preserve, access and transform an ever-increasing diversity of data.” WD products are “strategically positioned to play a key role in supporting these long-term growth trends,” he said.

Enterprise and hyperscale cloud customers “continue to accelerate” their spending to “keep pace with rapid growth in data, and this represents a significant opportunity for our data center storage solutions,” he told analysts.

In the mobile market, meanwhile, WD is “well-positioned to capture growth opportunities with our comprehensive” product offerings, he said, projecting 
increasing average capacity in smartphones will continue to be a “driver of growth” for WD.

In flash memory during Q3, the company “saw the market environment continue to normalize with expected price declines,” he went on to say. WD continued to deploy its 64-layer 3D NAND technology across its product line, and “we will be ramping our 96-layer technology as planned throughout” 2018, he said.

Also in Q3, “demand trends in the cloud data center, embedded mobile and PC markets were positive, leading to strong pull for our hard drive and flash products,” COO Mike Cordano said on the call.

The company “shipped a record, industry-leading 100 exabytes of total storage as we optimized our output during a period of strong demand for our products,” he said. Flash market conditions were as expected in the quarter, he said, predicting the flash market will 
“continue to be constructive with the possibility of a constrained supply environment” in the back half of 2018.

In data center devices and solutions, demand for WD’s 10-TB and higher-capacity enterprise drives for cloud customers increased “substantially” from a year ago and from the second quarter, he also said. WD’s exabyte shipments for that category “more than doubled” from a year ago, he noted.

WD’s Q3 revenue grew to $5 billion from $4.6 billion a year ago, while operating income increased to $914 million from $525 million. But profit fell to $61 million (20 cents a share) from $248 million (83 cents a share).

Since the start of Q4, WD announced plans to ship products including three new professional-grade ultra-fast solutions in its G-Technology G-DRIVE and G-SPEED Shuttle product lines. Those three solutions were designed to meet the “escalating fast-transfer and high-capacity demands of professional content creators by enabling real-time 4K and 8K workflows,” the company said in an April 9 news release during the NAB Show in Las Vegas.