Western Digital Corporation (WDC) has reported a 6.37 percent fall in profit for the quarter ended Dec. 30, 2016. The company has earned $235 million, or $0.80 a share in the quarter, compared with $251 million, or $1.07 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $675 million, or $2.30 a share compared with $403 million or $1.72 a share, a year ago.
Revenue during the quarter surged 47.36 percent to $4,888 million from $3,317 million in the previous year period. Gross margin for the quarter expanded 405 basis points over the previous year period to 31.36 percent. Total expenses were 88.85 percent of quarterly revenues, down from 92.43 percent for the same period last year. This has led to an improvement of 358 basis points in operating margin to 11.15 percent.
Operating income for the quarter was $545 million, compared with $251 million in the previous year period.
However, the adjusted operating income for the quarter stood at $995 million compared to $427 million in the prior year period. At the same time, adjusted operating margin improved 748 basis points in the quarter to 20.36 percent from 12.87 percent in the last year period.
"We reported strong financial performance in the December quarter enabled by excellent operational execution by our team in a favorable market environment," said Steve Milligan, chief executive officer. "We saw healthy demand for capacity enterprise hard drives, all NAND based products and hard drives in client applications. We also achieved targeted cost and efficiency improvements and improved our liquidity position with continued strong cash flow performance."
Operating cash flow improves significantly
Western Digital Corporation has generated cash of $1,500 million from operating activities during the first half, up 31.23 percent or $357 million, when compared with the last year period.
The company has spent $316 million cash to meet investing activities during the first six months as against cash outgo of $454 million in the last year period.
The company has spent $4,386 million cash to carry out financing activities during the first six months as against cash outgo of $350 million in the last year period.
Cash and cash equivalents stood at $4,940 million as on Dec. 30, 2016, down 7.89 percent or $423 million from $5,363 million on Jan. 01, 2016.
Working capital decreases marginally
Western Digital Corporation has witnessed a decline in the working capital over the last year. It stood at $5,518 million as at Dec. 30, 2016, down 3.24 percent or $185 million from $5,703 million on Jan. 01, 2016. Current ratio was at 2.35 as on Dec. 30, 2016, down from 2.76 on Jan. 01, 2016.
Cash conversion cycle (CCC) has decreased to 10 days for the quarter from 24 days for the last year period. Days sales outstanding went down to 34 days for the quarter compared with 45 days for the same period last year.
Days inventory outstanding has decreased to 28 days for the quarter compared with 47 days for the previous year period. At the same time, days payable outstanding went down to 52 days for the quarter from 68 for the same period last year.
Debt increases substantially
Western Digital Corporation has witnessed an increase in total debt over the last one year. It stood at $13,073 million as on Dec. 30, 2016, up 421.88 percent or $10,568 million from $2,505 million on Jan. 01, 2016. Total debt was 45.12 percent of total assets as on Dec. 30, 2016, compared with 16.20 percent on Jan. 01, 2016. Debt to equity ratio was at 1.22 as on Dec. 30, 2016, up from 0.26 as on Jan. 01, 2016.
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