Thursday, 21 April 2011

why you're not listening if $wdc earnings disappointed you...

the company has been guiding the market, telling you that the eps is going to be lower because of overhang, clearly margins were not great.

our notes from the call;
tam ~165mm, they shipped 49.8mm down 2.5% y/y (industry 2.3%). $2.25bn sales ~ BR asp $45.18 (-$6 y/y)
demand next quarter seasonally weak, however because of earthquake supply disruption should create a supply shortage.
2.5 inch shortages greater than shortages in 3.5 inch.
..sounds to BR that WD is going to try to win share as other suppliers are disrupted..
gross margin 18.2% (25% y/y) (19% q/q)
r&d ~10% of revenue @ $252mm
net income $142mm 0.62 eps (0.66 non gaap) run-rate-p-e ~15.

is there a signed purchase agreement with hitatchi? its in the 10q
samsung-seagate, does it change the way you talk about your deal with regulators? ... no. still going to say merger is going to better serve customers, benefits of scale will be shared with customers.
intel expect low double digit growth, what is your oem colour? 2010 industry shipped more than end demand, too much inventory in channel, two year growth rate will be about 12%, 18% in '10-'09, so low growth this year.
any indication from oem's about hit aquisition? customer reaction has been very positive.
customers asking for more supply, do you ask for higher price, fixed orders, etc? work with customers for years, have flexible model, consistent, if their costs are higher, they share them, BR yes.
thought there was 8-10mm excess TAM, there was then a shortage in cpu in quarter, but they are pretty much back where they started. will take a full year to not be supply contrained for june, sep, dec get to equilib.
does toshiba have the ability/will to invest? their press release says yes
that is very significant piece of information that we've missed! need to find that ASAP...

BR thoughts; samsung-seagate deal is definitely a negative for the merger, its not positive. Toshiba deciding to invest is VERY negative, and need to find the press release that is referred to on the conference call.

reduced the position substantially until we find that toshiba press release and have a bit more of a think...

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