SAN JOSE, Calif. - Western Digital Corp. (NASDAQ:WDC) shares fell 5% as the company's fourth-quarter revenue fell short of Wall Street expectations, and its guidance for the first quarter of 2025 came in below analyst projections.
The data storage giant reported fourth-quarter earnings of $1.44 per share, surpassing the consensus estimate of $1.16. However, revenue for the quarter was $3.76 billion, slightly missing the analyst target of $3.74 billion. Compared to the same period last year, revenue surged 41% from $2.672 billion, indicating significant year-over-year (YoY) growth.
Looking forward, Western Digital anticipates first-quarter 2025 earnings to range between $1.55 and $1.85 per share, with the midpoint below the consensus estimate of $1.76. The company also forecasts revenue between $4 billion and $4.2 billion for the upcoming quarter, which trails the analyst consensus of $4.23 billion.
In their post-earnings note, analysts at Summit Insights Group downgraded the stock to Hold, citing their belief that "further improvements to profitability are now limited."
"We believe the storage industry has emerged from the cyclical downturn and is now entering a moderate supply constraint phase, triggering industry buyers to make strategic buys to guarantee supply," they noted.
David Goeckeler, Western Digital CEO, commented on the results, highlighting the company's diversified portfolio and strategic roadmap that align with the recovery across end markets. "We are structurally improving through-cycle profitability for both Flash and HDD," said Goeckeler. He also emphasized the transformative period driven by the AI Data Cycle, which is expected to increase the demand for storage solutions.
Western Digital's cloud revenue showed a robust increase of 21% quarter-over-quarter (QoQ), while client revenue grew by 3%. However, consumer revenue experienced a 7% decline QoQ. For the fiscal year 2024, the company reported a total revenue of $13 billion, a 6% increase YoY.
Western Digital's financial health remains solid, ending the quarter with an operating cash inflow of $366 million and $1.88 billion in total cash and cash equivalents. The company's strategic focus and technology leadership position it to capitalize on growth opportunities in the evolving digital landscape, despite the current market reaction to its financial guidance.