Western Digital today announced that it is beginning to recover from the devastating floods in Thailand that left many of its factories under water. One building in the company’s Bang Pa-in facility was brought back on line and started producing hard drives again on November 30th. The Bang Pa-in building had been under six feet of water since October 15th and took until November 17th to pump dry. Other buildings in this facility still need to be decontaminated, but so far the cleanup process has been ahead of internal schedules. The other large WD hard drive facility in Navanakorn, Thailand still remains under 2-feet of water and is currently being pumped dry.
Western Digital today announced that it is beginning to recover from the devastating floods in Thailand that left many of its factories under water. One building in the company’s Bang Pa-in facility was brought back on line and started producing hard drives again on November 30th. The Bang Pa-in building had been under six feet of water since October 15th and took until November 17th to pump dry. Other buildings in this facility still need to be decontaminated, but so far the cleanup process has been ahead of internal schedules. The other large WD hard drive facility in Navanakorn, Thailand still remains under 2-feet of water and is currently being pumped dry.
The big concern to investors is of course what size financial hit WD is going to take because of the flooding and costs involved. WD is estimating the December quarter cleanup costs will be between $225 million and $275 million. This is about even with typical operating expenses which WD is estimating at $265 million for the December quarter. This means a total typical and unusual charge expense of over $500 million for the quarter. Even with the floods Western Digital has been able to amass revenue of $1.8 billion and profit margins will be between 18 and 23 percent, at the high end of its earlier guidance.
For the rest of us that just want to know how supplies are going to be affected, Western Digital offers cold comfort. They are predicting that the demand for drives in the current quarter will be in the 170 million – 180 million unit range but the industry as a whole is only going to be able to ship 120 million units due to the supply constraints. WD predicts that supply constraints will “continue in the March quarter and beyond”. Meaning of course that if the demand is outstripping supply then prices will either hold steady at best and more likely rise for end buyers. Though WD did not provide any specifics on when hard drive production supply will eventually catch up to demand, based on the statement they issued it won’t be any earlier than the middle of 2012.
About The Author: Andrew Baxter is the Editor of LaptopReviews.com where he writes news and reviews covering the laptop industry. He is also a Contributing Editor at StorageReview.com.
