Western Digital's Q2 Results and Guidance Disappoint, Amid Weak NAND Demand; Spin-Off Plan Attracts Attention

Western Digital Corp. (WDC.US) reported its fiscal 2025 second-quarter earnings after the market closed on Wednesday in the U.S. Eastern Time. The data storage products maker reported Q2 revenue of $4.29 billion, topping the market's expectation of $4.26 billion; adjusted EPS of $1.77, topping the market's expectation of $1.78. However, Western Digital's third-quarter revenue guidance was below Wall Street's expectations, as the company expects a decline in demand from cloud and enterprise customers. High borrowing costs and economic uncertainty forced companies to reduce investments, severely affecting the demand for storage chips and hurting companies like Western Digital. Western Digital had said in early January that it expected its EPS, excluding certain items, to be at the low end of its guidance range due to a tough pricing environment for its flash business. Western Digital expects third-quarter revenue to be between $3.75 billion and $3.95 billion, according to data compiled by LSEG, below analysts' estimates of $4 billion. The company also expects adjusted EPS to be between $0.90 and $1.20, below analysts' expectation of $1.47. Earlier this month, its rival Seagate Technology (STX.US) also reported a third-quarter revenue guidance below market expectations. Western Digital also provided an update on its progress in splitting into two independent publicly traded companies, with one focusing on HDD business and the other on flash memory. "We believe that as we complete the separation of our businesses, Western Digital and SanDisk will continue to drive innovation and provide compelling storage solutions for our customers while delivering long-term value to our shareholders," said David Goeckeler, Western Digital's CEO. "We hope that our strong performance in the HDD space, combined with our strategic approach to managing the flash business in the new era of NAND, will allow each company to capture the growing storage demand driven by the AI data cycle." As of the time of writing, Western Digital's shares were up 3.47% after hours.