Western Digital Gears Up for Q2 Earnings: Here's What to Expect

Core Viewpoint - Western Digital Corporation (WDC) is expected to report its fiscal second-quarter 2025 results on January 29, with earnings estimates showing a decline compared to the previous year, while revenue is projected to increase significantly [1][2]. Financial Performance - The Zacks Consensus Estimate for earnings is $1.75 per share, down 8.4% over the past 60 days, compared to a loss of 69 cents per share in the same quarter last year [2]. - Revenue estimates are pegged at $4.26 billion, indicating a 40.4% increase from the prior year's figure [2]. - WDC has consistently surpassed earnings estimates in the last four quarters, with an average surprise of 63.9% [3]. Revenue and Earnings Guidance - Preliminary results indicate that WDC's revenues for the fiscal second quarter are expected to be at the midpoint of the previously issued guidance of $4.20 billion to $4.40 billion [4]. - Non-GAAP diluted earnings per share are now expected to be at the lower end of the prior guidance of $1.75 to $2.05, reflecting a challenging pricing environment in the Flash business [5]. Market Conditions and Demand - The company faces global macroeconomic uncertainties, increased competition in the storage sector, and rising expenses, with expected non-GAAP operating expenses between $695 million and $715 million for the fiscal second quarter [5]. - However, WDC's performance may benefit from strong demand in HDD, particularly from cloud customers, and growth in UltraSMR drives and enterprise SSD offerings [6]. Growth Opportunities - The emergence of growth opportunities in data storage driven by the AI data cycle is seen as a key catalyst for WDC and the storage industry [7]. - WDC is focusing on aligning its product portfolio with these growth opportunities across various end markets to mitigate volatility [7]. Segment Estimates - The Zacks Consensus Estimate for fiscal second-quarter HDD revenues is $2.36 billion, while Flash revenues are estimated at $1.88 billion [9]. Earnings Prediction Model - The current model does not predict an earnings beat for WDC, with an Earnings ESP of -0.14% and a Zacks Rank of 5 (Strong Sell) [10].