Western Digital falls on weak guidance; Analysts cautious

(Updated - August 1, 2023 5:41 AM EDT)

Investing.com -- Western Digital guided for a larger loss in the current quarter after reporting quarterly results that topped Wall Street estimates.

Western Digital Corporation (NASDAQ: WDC) shares fell nearly 2% in pre-market Tuesday trading.

Western Digital reported an adjusted loss of $1.98 on revenue of $2.70 billion. Analysts polled by Investing.com anticipated a loss of $2.02 on revenue of $2.53B.

For fiscal Q1, Western Digital guided a loss in the range of $1.80 per share to $2.10 per share on revenue between $2.55B and $2.75B, missing estimates of $1.43 and $2.26B, respectively.

Summit Insights Group analyst Kinngai Chan said WDC delivered "another quarter of disappointing outlook."

"Consistent with our view, we expect the industry and WDC will continue to experience gross margin headwinds as the industry remains in over-supply and over-capacity mode. Our industry checks in the PC client and the smartphone supply chain do not give us any confidence for pricing recovery in flash until sometime in 2024. We believe HDD and flash demand-supply dynamics will only improve into 2024 as cloud program spending recovers coupled with PC and smartphone OEMs increasing flash content per box," the analyst said.

Goldman Sachs analyst Toshiya Hari commented:

"While industry fundamentals across the HDD and NAND markets are bottoming with the company indicating signs of a recovery in demand, particularly in Client and Consumer, and we believe management has taken steps in HDD (and continues to take steps in NAND) to bring supply/demand into balance, we maintain our cautious investment thesis relative to our broader coverage universe in light of the competitive backdrop in NAND and the company’s current balance sheet."

Additional reporting by Senad Karaahmetovic

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