After chopping fiscal first quarter estimates last month, Western Digital Corporation (WDC) is taking measures to boost its sales by introducing new products in the market.
The company increased its enterprise-class storage offerings as it rolled out the new “WD RE SAS” and “WD RE SATA” hard drives. These hard drives have the highest capacity available in the market presently as they can store data up to 4 TB. The product would be made available to customers in different capacities – 1 TB, 2 TB, 3 TB and 4 TB.
The 3.5-inch WD RE SAS and WD RE SATA are good for enterprise-class customers and cater to the incremental demands of business-critical environments.
Western Digital seems to have grabbed a strong foothold in the capacity-optimized 3.5-inch market segment. WD RE SAS and SATA 4 TB drives are specially designed for enterprise storage and applications. This enhanced version offers 33% more capacity than earlier versions of the product.
Although the company is coming up with new products, management expects cost pressures to continue, which will be driven by rare earth materials, logistic costs, foreign currency exposure and some underutilization of capacity. The company will work closely with its suppliers in resolving cost challenges. Moreover, the company’s capex plans for new products are still intact.
Western Digital expects the weakness in PC demand to have a significant impact on the overall market for hard disks. The company currently expects quarterly shipments to drop to 140 million units from 157 million guided previously. We expect the improved mix from the addition of Hitachi’s Global Storage Technology business to positively impact the gross margin.
This apart, the Hitachi deal is expected to strengthen its foothold in the data storage business. Although the company has been able to handle competition efficiently, competition from Seagate Technology plc (STX), Fujitsu Ltd, Samsung and Toshiba keeps it on its toes.
The company has a Zacks #3 Rank (implying a short-term Hold rating).
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