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Western Digital sees channel inventory improve

Hard drive vendor Western Digital posted solid fourth quarter sales in 2003 as channel inventory levels improved.

Hard drive vendor Western Digital posted global sales of US$835m for the quarter ending December 2003 – an increase of 11% year-on-year. Earnings slipped 8% to US$68.8m partly due to pricing pressure brought on by a glut of inventory in the channel.

“We are pleased with our December quarter results, especially in light of challenging inventory and pricing conditions that prevailed in the distribution channel during the quarter,” said Matt Massengill, chairman and chief executive officer of Western Digital.

“We were able to partially offset these dynamics with a richer mix of higher capacity drives and the solidly-accretive financial performance of our newly-integrated head operations.” Added Massengill. “Based on recent industry commentary, we believe that weeks of inventory in the distribution channel will be reduced during the seasonally-softer March quarter from the current high levels of the industry's manageable range.”

“Overall demand for hard drives in the second quarter was strong across all geographic markets-reflected by our 12.7 million total unit shipments and sequential revenue growth in each major region-as we continued to participate in a set of multi-year, high-volume growth opportunities in the commercial and consumer markets. In addition to strength in our core desktop PC market, growing numbers of hard drives were shipped into newer markets such as enterprise-class Serial ATA, video entertainment, and external hard drives for system backup and mass storage of digital media content,” he added.

New York quoted Western Digital’s comments indicate the impact of channel inventory levels on overall financial performance. Balancing sales into the channel alongside sales out remains a fine art to perfect.

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