Western Digital To Split Business, Shifts Focus After Varied Segmental Performance in Q1

Western Digital Corp WDC reported a first-quarter FY23 revenue decline of 26% year-on-year to $2.75 billion, beating the consensus of $2.65 billion. The revenue grew by 3% Q/Q.

The company clocked an adjusted EPS loss of $(1.76), beating the consensus loss of $(1.90).

Cloud revenue decreased 52% Y/Y to $872 million (down by 12% Q/Q), Client revenue declined 7% Y/Y to $1.15 billion (up by 11% Q/Q), and Consumer revenue grew 8% Y/Y to $731 million (up by 14% Q/Q).

The non-GAAP gross margin declined by 2,260 bps to 4.1%.

It used $626 million in operating cash flow and held $2.03 billion in cash and equivalents.

WDC's board unanimously approved a plan to separate its HDD and Flash businesses. It sees one-time GAAP-only charges from separation transactions during periods preceding closing.

CEO David Goeckeler said, "Our Consumer and Client-end markets continue to perform well, and we now expect our Cloud end market to grow going forward." 

Outlook: WDC sees Q2 FY23 revenue of $2.85 billion - $3.05 billion, compared to the consensus of $2.92 billion.

It sees an adjusted EPS loss of $(1.35) - $(1.05) versus the consensus loss of $(1.39).

Price Action: WDC shares traded higher by 13.20% at $44.11 premarket on the last check Monday.