After ending the last fiscal year on a dismal note, data storage company Western Digital Corp. (NASDAQ: WDC) reported first-quarter earnings that declined year-over-year but came in slightly above the estimates. The bottom-line was impacted by a 20% fall in revenues, reflecting the continuing slowdown in the flash memory market.
The company also provided guidance for the second quarter, which fell short of expectations, and announced the retirement of CEO Steve Milligan. The stock fell sharply during Wednesday’s extended trading session, following the announcement.
Earnings Fall
Adjusted earnings of the San Jose, California-based tech firm dropped to $0.34 per share from $3.04 per share in the first quarter of 2019, but slightly exceeded the forecast. On an unadjusted basis, the company reported a net loss of $276 million or $0.93 per share, compared to last year’s net income of $511 million or $1.71 per share.
There was a 20% decline in revenues to $4 billion, which is slightly above the consensus estimate.
Guidance
For the second quarter, the management expects adjusted earnings to be in the range of $0.45 per share to $0.65 per share, which is below the analysts’ forecast. The forecast for revenue is between $4.1 billion and $4.3 billion. Gross margin is expected to be between 21% and 22%.
“The overall demand environment remains solid. We continue to believe the flash industry has passed a cyclical trough, with improving trends across our flash product portfolio. With a broad and growing product portfolio, Western Digital remains well positioned to benefit from the long-term drivers of the growth and value of data,” said CEO Steve Milligan.
CEO Exit
A separate statement from the company said that Milligan has decided to retire as the CEO. He will continue in that position until a successor is identified. Milligan will remain a director on Western Digital’s board during the transition period.
Western Digital shares have made strong gains after falling sharply mid-year. The stock, which rose 61% so far this year, closed Wednesday’s trading lower and lost further during the after-hours session.