After updating its Q4 earnings guidance last night after the close, storage name Western Digital (WDC 92.60, -0.06 -0.06%) trades lower today. The muted reaction may be explainable when you look at the stock’s run up year-to-date; in that regard, some of the guidance update may have been priced in.
Off the bat, WDC reiterated its non-GAAP earnings guidance of about $12 per share for the calendar year 2017.
The company left Q4 revenue unchanged at $4.8 billion, on non-GAAP gross margin of about 41% and non-GAAP earnings per share of $2.85. Prior expectations for Gross margins were for 40%, while earnings per share guidance was $2.55-2.65 before last night.
Management noted that the better-than-anticipated profitability is being driven by continued good execution and strong demand for WDC’s broad portfolio of storage products, particularly for flash-based devices and solutions and the 10 terabyte helium capacity hard drives.
Management last quarter noted “good” demand for NAND based products. Perhaps the updated guidance means either that demand trend has continued, or WDC was able to garner better pricing on NAND products. Further, in the MarchQ management noted that strength from the SanDisk business has afforded the company a leading position in the storage space. It may not be farfetched to suggest that part of the updated guidance may be a result of continued strength in the SanDisk business. Another possibility is that WDC management, in releasing expectations a month ahead of the print, may be attempting to get out ahead of any sentiment as it relates to the ongoing Toshiba (TOSBF 2.60, -0.09 -3.3%) memory chip unit divestiture situation.
Full results for the period ending June 30, 2017 will be available on July 27, after the bell.