Western Digital’s first-quarter forecast disappoints as weak cloud demand weighs By Reuters

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<span>© Reuters. FILE PHOTO: Western Digital hard drives are shown for sale at an Office Depot Inc store in Encinitas, California, U.S., May 8, 2017. REUTERS/Mike Blake/File Photo</span><br />
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<p>(Reuters) -Memory chipmaker <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> Western Digital </span></span> Corp (NASDAQ:) forecast a bigger-than-expected loss in the first quarter and revenue below Wall Street targets on Monday as weak demand, mainly for its cloud business, forces it to cut production.</p>
<p>The company said it expects its current-quarter loss to include a charge of about $200 million to $220 million for underutilization of its factories, sending its shares down about 2% in extended trading. </p>
<p>Cloud companies will take another “couple of quarters” to clear out excess inventory, finance chief Wissam Jabre said in June. </p>
<p>Cloud revenue fell 53%, to $994 million, in the quarter ended June 30.</p>
<p>Large cloud service providers have been in a “very severe inventory digestion phase and kind of took a pause on buying anything,” CEO David Goeckeler said.</p>
<p>Western Digital forecast its adjusted loss per share to be in the range of $2.10 to $1.80, compared to an estimated loss of $1.40 per share. It also forecast revenue for the same period below estimates.</p>
<p>Rival Seagate Technology also forecast downbeat revenue for its first quarter last week, on weakness in major market China and lower tech spending.</p>
<p>Cutting production – something memory chipmakers did in the first half this year as demand slumped – is a sign that companies are trying to restore order to a supply-glut-ridden industry. </p>
<p>While this has caused steep writedowns in the value of unsold stockpiles and hurt profits, it has also helped stabilize the market.</p>
<p>Western Digital said it will “significantly” cut its capital expenditure in fiscal 2024.</p>
<p>“Our two largest end-markets, client and consumer, are returning to growth, inventories are normalizing, content per unit is increasing and price declines have been moderating,” Goeckeler said.</p>
<p>His statement mirrored those by memory-chip industry giants like South Korea’s Samsung Electronics (OTC:) and SK Hynix that the worst was behind the industry.</p>
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