Western Digital looking at digital home for growth
Hard drive manufacturer Western Digital Corp (WDC.N) is focusing on investing in products and strategies to serve the "digital home," said the company's chief financial officer.
Hard-drive makers face a challenge from flash storage and computer devices such as Apple Inc's (AAPL.O) iPad tablet, which does not use a hard drive.
Western Digital, the No. 2 hard drive manufacturer by revenue, has seen its share price fall 28 percent since the beginning of the year.
The company has placed high hopes in new branded products for consumers, such as a media player with a built-in hard drive called WD TV Live Hub unveiled last month, and a new application for smartphones that enables users to remotely access personal photos stored on their home networks.
CFO Wolfgang Nickl told analysts in Boston on Thursday, "You can read from that that one of the preferences is to invest in the digital home."
Matt Bryson, an analyst with Avian Securities, said that it makes sense for Western Digital to invest in those types of products because they have higher margins.
Retail sales, which includes branded Western Digital products such as the My Book hard drive, account for 18 percent of the company's revenue, Bryson said. The company reported third-quarter revenue of $2.4 billion.
Western Digital ended the quarter with net cash of nearly $2.5 billion, and Nickl said the company would prefer to "invest the cash in strategic options."
"If we can't find an opportunity that makes sense, we'll return the cash. Our preference is doing it through share buybacks because this is still a volatile and cyclical business," he said.
(Reporting by Alex Dobuzinskis: Editing by Steve Orlofsky)
Credit: Reuters
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