Western Digital issues preliminary results, announces surprise CFO departure

Investing.com -- Western Digital Corporation announced its preliminary second fiscal quarter results, revealing that revenue is expected to be at the midpoint of its guidance range of $4.2 billion to $4.4 billion.

However, non-GAAP diluted earnings per share (EPS) are anticipated at the lower end of the guidance range of $1.75 to $2.05, primarily due to a challenging pricing environment in the company’s flash business.

The company also disclosed that Wissam Jabre, its Executive Vice President and Chief Financial Officer, will step down following the completion of the planned spin-off of its flash business.

Jabre’s resignation will be effective February 28, 2025, as Western Digital (NASDAQ: WDC) completes the separation of its hard disk drive (HDD) and flash businesses. A comprehensive search for his successor has begun.

Evercore ISI noted that the “weaker EPS is due to a more challenging pricing environment in the flash business," but the focus remains on the March quarter guidance.

Despite the challenges, the firm maintained an Outperform rating and an $85 target for the stock.

Morgan Stanley (NYSE: MS) also remarked on the CFO transition as unexpected, stating, "The CFO transition is a surprise at this stage of the business separation, but we still see the HDD business on solid footing."

They noted that the anticipated EPS aligns with expectations given the current NAND pricing pressures and suggested that the upcoming separation could create a positive setup for the stock.

The bank also highlighted the potential for a "clearing event for shares" as investors focus on the sum-of-the-parts valuation.

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