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Western Digital (WD) HDD Production Partly Resumes in Thailand
Western Digital Corp. is updating its financial outlook for the December quarter
and the progress to date of its operations recovery effort in Thailand. The
company is also providing its view of the industry conditions for the December
2011 quarter and beyond.
Unusual charges related to the floods are expected to be in
the range of $225 million to $275 million for the December quarter, exclusive of
any insurance recovery. The company expects to file a property damage claim of
at least $50 million and an additional claim for business interruption during
the December quarter. The accounting treatment of these claims is dependent on
their status as of the end of the quarter. The company expects acquisition
related charges in the December quarter of approximately $15 million.
Thailand Flood Recovery Effort:
- Re-started production of hard drives this week in one of
its buildings in Bang Pa-in (BPI), Thailand, one week ahead of internal
schedules. This facility had been submerged in some six feet of water since
October 15, the estate was pumped dry on November 17, main power was
restored on November 26 and production restarted November 30;
- Has removed all submerged slider manufacturing equipment
from the BPI facilities for assessment, decontamination and refurbishment
and has commenced decontamination and restoration of its remaining buildings
in BPI;
- Expects to recommence head slider production in BPI in
the March 2012 quarter (Q3 FY'12) and also begin production in a new WD
slider fab location in Penang, Malaysia, in the same time frame; and
- The company's other Thailand hard drive facilities at
Navanakorn remain under approximately two feet of water. The industrial
estate is expected to be pumped dry within ten days at which point the work
of decontamination and refurbishment will commence.
Industry Conditions:
The company believes that hard drive
industry shipments in the December quarter will be limited to approximately 120
million units due to production and supply constraints related to the historic
flooding in Thailand. This includes units that were in inventory at the
beginning of the quarter. The company believes that demand for the December
quarter is in the range of 170 million to 180 million units. The company
believes that significant industry supply constraints will continue in the March
quarter and beyond.
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