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Western Digital doubles profits to $519m

Shorter warranties pay off
Wed Oct 24 2012, 12:38
Western Digital 4TB enterprise hard drive

STORAGE VENDOR Western Digital has reported its financial results for the first quarter its 2013 fiscal year with revenues tipping over the $4bn mark while profits more than doubled.

Western Digital, which has now completed its purchase of Hitachi's hard drive unit and promptly slashed warranties on the majority of its drives, is reaping the rewards of having to compete against only Seagate and Toshiba for business. The firm announced a 50 percent increase in revenues to $4bn while profits increased by 117 percent to $519m.

As Western Digital cut the warranties on its popular Green and Blue hard drive lines to two years, the firm's balance sheet shows a steep decrease in warranty liabilities to $146m despite the firm shipping more drives than ever after absorbing Hitachi's operations. Storage vendors, including Western Digital, have been making hay while hard drive prices have remained high following the devastating floods that hit Thailand in 2011, even though production has been back in full swing for some time now and Western Digital said it shipped 57.8 million hard drives during the three months up to 30 September 2012.

John Coyne, CEO of Western Digital said, "While the macroeconomic environment is dampening near term demand, we remain confident in the continued long-term growth in the creation, storage and management of digital content. Western Digital has never been better positioned to address this opportunity, with great people, deep technology, a broad product portfolio and strong customer and supplier relationships."

What Coyne and his counterpart at Seagate didn't say is that the rapidly dropping prices of solid state drives (SSD) will eventually bite, as both firms will not be able to rely on artificially high hard drive prices for much longer. Western Digital and Seagate have been slow to get into the SSD market and while both firms do offer enterprise SSDs they are still banking on traditional platter based hard drives to bring home the bacon for some time yet. µ


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