Western Digital (WDC) to split HDD and Flash businesses, reports Q1 beat

Western Digital (NASDAQ: WDC) shares surged more than 13% premarket Monday after the company announced it would split its HDD and Flash businesses. The company also reported earnings, which topped consensus expectations.

The news of the split up of WDC's HDD and Flash businesses comes days after talks of a merger with Japan's Kioxia stalled. The company said it will create two independent, public companies with a market-specific, strategic focus.

Last year, WDC launched a review after activist investor Elliott Management disclosed a stake of nearly $1 billion in the company and pushed it to separate the businesses. Meanwhile, reports last week stated that merger talks between Western Digital's semiconductor memory business and Kioxia have ended,

Elsewhere on Monday, WDC reported a Q1 loss per share of $1.76, $0.15 better than the analyst estimate of a loss of $1.91 per share. Revenue for the quarter came in at $2.75 billion versus the consensus estimate of $2.66 billion.

Revenue rose by 3% quarter-on-quarter, helped by an 11% QoQ increase in Client revenue and a 14% QoQ rise in Consumer revenue. However, Cloud revenue decreased by 12% QoQ.

“Western Digital’s fiscal first-quarter results exceeded our expectations as the team’s efforts to bolster business agility and develop differentiated and innovative products across a broad range of end-markets have resulted in sequential margin improvement across flash and HDD businesses,” said David Goeckeler, Western Digital CEO.

Goeckeler added that Consumer and Client end markets continue to perform well for the business, and they now expect their Cloud end market to grow going forward.

Looking ahead, Western Digital sees its Q2 2024 loss per share between $1.35 and $1.05 versus the consensus of a $1.39 loss per share. Q2 2024 revenue is expected to be between $2.85 billion and $3.05 billion, versus the consensus of $2.92 billion.

By Sam Boughedda

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