Analysis of Reportable Segments
Western Digital Corp. operates in 2 segments: Flash-based products (Flash) and Hard disk drives (HDD).
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Analysis of Debt
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Segment Profit Margin
Western Digital Corp., profit margin by reportable segment
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Flash-based products (Flash) | ||||||
| Hard disk drives (HDD) |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
- Flash-based products profit margin trend
- The profit margin for flash-based products displayed a notable increase from 24.49% in mid-2020 to a peak of 36.16% in mid-2022. Subsequently, there was a significant decline to 7.14% by mid-2023, indicating considerable volatility in this segment's profitability within the observed period.
- Hard disk drives profit margin trend
- The profit margin for hard disk drives showed relative stability compared to flash products. It started at 29.02% in mid-2020, decreased slightly to 27.03% in mid-2021, rose again to 29.44% in mid-2022, and then decreased somewhat to 24.06% by mid-2023. Overall, it demonstrates moderate fluctuations but remains within a comparatively narrower range.
- Comparative insights
- While both segments experienced fluctuations, flash-based products exhibited greater volatility, particularly with a sharp decline after reaching its highest profitability in mid-2022. Hard disk drives maintained a more consistent profit margin, though it too faced some decrease in the final period. These patterns suggest differing market or cost dynamics impacting each segment over the analyzed timeframe.
Segment Profit Margin: Flash-based products (Flash)
Western Digital Corp.; Flash-based products (Flash); segment profit margin calculation
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Segment profit margin = 100 × Gross profit ÷ Net revenue
= 100 × ÷ =
- Net Revenue
- The net revenue for the Flash-based products segment showed an initial increase over the observed periods from 2019 onward. It rose from $7,769 million in 2019 to a peak of $9,753 million in 2022, followed by a notable decline to $6,063 million in 2023. This indicates a strong growth trend until 2022, with a significant contraction in the subsequent year.
- Gross Profit
- Gross profit exhibited a similar upward trend initially, increasing from $1,903 million in 2019 to $3,527 million in 2022. However, in 2023, gross profit experienced a dramatic decrease to $433 million, reflecting a substantial reduction in profitability relative to previous years. This sharp decline contrasts with the prior growth trajectory and suggests considerable challenges during the latest period.
- Segment Profit Margin
- The segment profit margin demonstrated consistent improvement from 24.49% in 2019 to 36.16% in 2022, indicating enhanced profitability efficiency within the segment. Nevertheless, this metric dropped significantly to 7.14% in 2023. The steep decline in profit margin aligns with the reduced gross profit and net revenue, highlighting diminished profitability in the most recent year.
- Overall Trends and Insights
- The Flash segment's performance between 2019 and 2022 was characterized by growth in revenue, gross profit, and profitability margins, signaling a period of strong operational results. The marked reversal in 2023, with declines across these key financial indicators, points to a contraction possibly driven by market conditions, cost pressures, or other external factors impacting the segment's financial health. Such volatility suggests the need for a closer examination of underlying causes to inform strategic responses.
Segment Profit Margin: Hard disk drives (HDD)
Western Digital Corp.; Hard disk drives (HDD); segment profit margin calculation
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Segment profit margin = 100 × Gross profit ÷ Net revenue
= 100 × ÷ =
The "Hard disk drives (HDD)" reportable segment exhibited notable fluctuations in financial performance between 2020 and 2023. Gross profit reached its peak in the fiscal year ending July 2, 2021, at $2,661 million, followed by a considerable decline to $1,505 million in the fiscal year ending June 30, 2023. This represents a sharp reduction in profitability over the recent periods.
Net revenue demonstrated a similar fluctuating pattern, initially decreasing from $8,967 million in 2020 to $8,216 million in 2021, then rebounding to $9,040 million in 2022 before experiencing a significant drop to $6,255 million in 2023. The substantial decrease in revenue in the most recent year suggests challenges in sales or market demand for the segment.
The segment profit margin, which indicates profitability relative to revenue, also reflected these revenue and profit trends. The margin showed a slight decline from 29.02% in 2020 to 27.03% in 2021, rebounded to the highest margin of 29.44% in 2022, and then fell sharply to 24.06% in 2023. This decrease in profit margin in 2023 can imply increased cost pressures or reduced pricing power within the segment.
Overall, the segment demonstrated resilience with profitability recovering in 2022; however, the fiscal year 2023 highlights a downturn marked by reduced revenue, gross profit, and profit margin. The declining figures in 2023 may warrant further investigation into market conditions, cost structures, and competitive dynamics affecting the HDD segment.
Net revenue
Western Digital Corp., net revenue by reportable segment
US$ in millions
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Flash-based products (Flash) | ||||||
| Hard disk drives (HDD) | ||||||
| Total |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
- Flash-based products (Flash) Revenue Trend
- Revenue from flash-based products exhibited a consistent upward trajectory from fiscal year 2020 to 2022, increasing from 7,769 million USD to a peak of 9,753 million USD in 2022. However, in fiscal year 2023, there was a significant decline to 6,063 million USD, indicating a contraction in this segment after several years of growth.
- Hard Disk Drives (HDD) Revenue Trend
- The hard disk drive segment experienced fluctuating revenues within the observed period. Starting at 8,967 million USD in fiscal 2020, the segment saw a decrease to 8,216 million USD in 2021, followed by a rebound to 9,040 million USD in 2022. Similar to flash products, HDD revenue fell sharply in fiscal 2023 to 6,255 million USD, suggesting challenges impacting both product lines concurrently in the most recent year.
- Total Segment Revenue
- Total net revenue from the reportable segments increased steadily from 16,736 million USD in 2020 to a high of 18,793 million USD in 2022, reflecting overall growth driven by both product categories. In fiscal year 2023, total revenue declined markedly to 12,318 million USD, representing a substantial decrease of approximately 34.5% from the prior year peak. This decline signals an overall downturn affecting the company’s core product revenue streams.
- Overall Insights
- Between 2020 and 2022, both flash-based products and hard disk drives contributed to rising revenues, supporting continuous growth in total segment revenue. The abrupt revenue decrease across both segments in 2023 suggests market pressures, potentially including demand contraction, supply chain issues, or competitive factors. The 2023 downturn highlights an important area for further investigation and strategic response to stabilize and reinvigorate sales performance.
Gross profit
Western Digital Corp., gross profit by reportable segment
US$ in millions
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Flash-based products (Flash) | ||||||
| Hard disk drives (HDD) | ||||||
| Total |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
- Flash-based products (Flash) gross profit
- The gross profit from flash-based products shows a notable upward trend from 2020 to 2022, increasing from 1,903 million USD in 2020 to a peak of 3,527 million USD in 2022. However, in 2023, this figure experiences a sharp decline, dropping to 433 million USD, representing a significant reduction compared to the previous years.
- Hard disk drives (HDD) gross profit
- Gross profit from hard disk drives exhibits a fluctuating pattern over the examined period. Starting at 2,602 million USD in 2020, it declines to 2,221 million USD in 2021, then rises again to 2,661 million USD in 2022. In 2023, the gross profit decreases considerably to 1,505 million USD, indicating a downward shift in profitability for this segment in the latest period.
- Total gross profit
- The total gross profit, combining both segments, progressively increases from 4,505 million USD in 2020 to 6,188 million USD in 2022, suggesting overall growth in profitability. However, in 2023, there is a pronounced drop to 1,938 million USD, signaling a substantial decline in total gross profit compared to recent years.
- Summary of trends
- Between 2020 and 2022, both flash-based products and HDD segments contributed to rising total gross profit, with flash-based products showing stronger growth. The year 2023 marks a sharp reversal in this trend, with both segments experiencing significant decreases in gross profit. This downturn contributes to an overall substantial decline in total gross profit, which may warrant further investigation into underlying causes such as market conditions, product demand, or cost structure changes.