Hard disk manufacturer Western Digital
Here's the lowdown of what's working and what's not for the company.
Facing hard times
Although the management seemed happy as earnings were above expectations, it does not hide the fact that revenue declined by 19% from the comparable year-ago quarter, to $2 billion. Net income fell even more, 36% to $145 million due to higher expenses incurred in restoring its manufacturing facility affected by the floods.
While Western Digital was busy fixing its manufacturing and component facilities, its rival Seagate
But that was not the end of Western Digital's woes. In March 2011, when it announced plans to acquire Hitachi's
The way ahead
On the bright side, revenue and profits are expected to get a facelift in later half of 2012 when Western Digital claims that it would revive production capacity. Since demand continues to outstrip supply for hard drives, the company should benefit from high prices translating into higher profits.
Western Digital is preparing itself well this time around. Learning from its previous mistakes, the company is in the process of diversifying its operations geographically so it can reduce risks from natural calamities in future.
The Foolish bottom line
At this juncture, it's important for Western Digital to maintain customer loyalty and rebuild its manufacturing facility. Also, since it's yet to acquire HGST, which would ensure dominance over Seagate, I prefer to wait and watch how things pan out for this hard-disk manufacturer.
I've kept my eyes on Western Digital, and you can do that too by adding it to your Watchlist. It's free, and lets you stay on top of the latest news and analysis for your favorite companies.
Keki Fatakia does not hold shares in any of the companies mentioned in this article. The Motley Fool owns shares of Western Digital. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.