8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 18, 2011

Western Digital Corporation

(Exact name of registrant as specified in its charter)

Delaware	001-08703	33-0956711
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3355 Michelson Drive, Suite 100 Irvine, California	92612
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 672-7000

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On January 18, 2011, Western Digital Corporation (“Western Digital”) announced financial results for the second fiscal quarter ended December 31, 2010. A copy of the press release making this announcement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of Western Digital’s Investor Information Summary for the second quarter ended December 31, 2010 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1	Press Release issued by Western Digital Corporation on January 18, 2011 announcing financial results for the second fiscal quarter ended December 31, 2010.
99.2	Second Quarter Fiscal Year 2011 Western Digital Corporation Investor Information Summary.

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Western Digital Corporation (Registrant)
	By:	/s/ Michael C. Ray
Date: January 18, 2011		Michael C. Ray
		Vice President, General Counsel and Secretary

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EX-99.1

Exhibit 99.1

Company contacts:
Bob Blair
Investor Relations
949.672.7834
robert.blair@wdc.com

Steve Shattuck
Public Relations
949.672.7817
steve.shattuck@wdc.com

FOR IMMEDIATE RELEASE:

WD^® ANNOUNCES Q2 REVENUE OF $2.475 BILLION AND
NET INCOME OF $225 MILLION, OR $0.96 PER SHARE

IRVINE, Calif. — Jan. 18, 2011 — Western Digital Corp. (NYSE: WDC) today reported revenue of $2.475 billion, hard-drive unit shipments of 52.2 million and net income of $225 million, or $0.96 per share for its second fiscal quarter ended Dec. 31, 2010. In the year-ago quarter, the company reported revenue of $2.619 billion, shipped 49.5 million hard drives, and reported net income and earnings per share of $429 million and $1.85, respectively.

The company generated $505 million in cash from operations during the December quarter, ending with total cash and cash equivalents of $3.1 billion.

“We are pleased to deliver better-than-expected revenues, profitability and gross margin in the December quarter, reflecting solid execution and an improvement in hard drive industry conditions compared with the prior two quarters,” said John Coyne, president and chief executive officer. “The opportunity for profitable growth in our industry remains tremendous and we are committed to improving our financial performance over the longer term. We plan to do so with a continued emphasis on our industry-leading low-cost structure, high quality, highly reliable and highly available products, and a sharp focus on matching production with true customer demand.”

WD Announces Q2 Revenue of $2.475 Billion and
Net Income of $225 Million, or $0.96 Per Share
Page 2

The investment community conference call to discuss these results will be broadcast live over the Internet today at 3 p.m. PST/6 p.m. EST. The call will be accessible live and on an archived basis via the link below. The company is publishing an expanded investor summary sheet today on the investor relations section of its Web site. After the conclusion of today’s webcast conference call, the summary sheet will be updated to reflect the company’s guidance.

Audio webcast:	www.westerndigital.com/investor
	Click on “Conference Calls”
Telephone replay:	888-568-0891 (toll free)
	+1-402-998-1567 (international)

About WD

WD, one of the storage industry’s pioneers and long-time leaders, provides products and services for people and organizations that collect, manage and use digital information. The company designs and produces reliable, high-performance hard drives and solid state drives that keep users’ data accessible and secure from loss. Its advanced technologies are configured into applications for client and enterprise computing, embedded systems and consumer electronics, as well as its own consumer storage and media products.

WD was founded in 1970. The company’s storage products are marketed to leading OEMs, systems manufacturers, selected resellers and retailers under the Western Digital^® and WD brand names. Visit the Investor section of the company’s Web site (www.westerndigital.com) to access a variety of financial and investor information.

WD Announces Q2 Revenue of $2.475 Billion and
Net Income of $225 Million, or $0.96 Per Share
Page 3

This press release contains forward-looking statements concerning opportunities for growth in the industry and WD’s financial performance. The foregoing forward-looking statements are based on WD’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including: the impact of continued uncertainty and volatility in global economic conditions; supply and demand conditions in the hard drive industry; actions by competitors; unexpected advances in competing technologies; uncertainties related to the development and introduction of products based on new technologies and expansion into new data storage markets; business conditions and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; changes in the availability and cost of commodity materials and specialized product components that WD does not make internally; and other risks and uncertainties listed in WD’s recent Form 10-Q filed with the SEC Oct. 29, 2010, to which your attention is directed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and WD undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

###

Western Digital, WD, and the WD logo are registered trademarks of Western Digital Technologies, Inc. All other trademarks mentioned herein belong to their respective owners.

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions; unaudited)

	Dec. 31,		Jul. 2,
	2010		2010
ASSETS
Current assets:
Cash and cash equivalents	$	3,110	$	2,734
Accounts receivable, net		1,250		1,256
Inventories		568		560
Other		192		170
Total current assets		5,120		4,720
Property and equipment, net		2,277		2,159
Goodwill		151		146
Other intangible assets, net		79		88
Other assets		216		215
Total assets	$	7,843	$	7,328
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,628	$	1,507
Accrued expenses		262		281
Accrued warranty		135		129
Current portion of long-term debt		119		106
Total current liabilities		2,144		2,023
Long-term debt		231		294
Other liabilities		309		302
Total liabilities		2,684		2,619
Shareholders’ equity		5,159		4,709
Total liabilities and shareholders’ equity	$	7,843	$	7,328

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)
(unaudited)

	Three Months Ended						Six Months Ended
	Dec. 31,			Jan. 1,			Dec. 31,			Jan. 1,
	2010			2010			2010			2010
Revenue, net	$	2,475		$	2,619		$	4,871		$	4,827
Cost of revenue		2,000			1,932			3,959			3,626
Gross margin		475			687			912			1,201
Operating expenses:
Research and development		169			154			336			296
Selling, general and administrative		66			60			125			113
Total operating expenses		235			214			461			409
Operating income		240			473			451			792
Net interest and other		(1	)		(2	)		(1	)		(4	)
Income before income taxes		239			471			450			788
Income tax provision		14			42			28			71
Net income	$	225		$	429		$	422		$	717
Income per common share:
Basic	$	0.98		$	1.89		$	1.83		$	3.17
Diluted	$	0.96		$	1.85		$	1.80		$	3.10
Weighted average shares outstanding:
Basic		230			227			230			226
Diluted		235			232			235			231

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

	Three Months Ended						Six Months Ended
	Dec. 31,			Jan. 1,			Dec. 31,			Jan. 1,
	2010			2010			2010			2010
Cash flows from operating activities
Net income	$	225		$	429		$	422		$	717
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		151			126			301			247
Stock-based compensation		18			13			37			27
Deferred income taxes		1			(5	)		1			(5	)
Changes in operating assets and liabilities		110			(6	)		134			5
Net cash provided by operating activities		505			557			895			991
Cash flows from investing activities
Purchases of property and equipment		(250	)		(199	)		(450	)		(375	)
Sales and maturities of investments		—			3			—			3
Net cash used in investing activities		(250	)		(196	)		(450	)		(372	)
Cash flows from financing activities
Employee stock plans, net		22			37			31			60
Repurchases of common stock		—			—			(50	)		—
Repayment of long-term debt		(25	)		(19	)		(50	)		(38	)
Net cash provided by (used in) financing activities		(3	)		18			(69	)		22
Net increase in cash and cash equivalents		252			379			376			641
Cash and cash equivalents, beginning of period		2,858			2,056			2,734			1,794
Cash and cash equivalents, end of period	$	3,110		$	2,435		$	3,110		$	2,435

EX-99.2

Exhibit 99.2

Page ? 1 Volume and Market Share EPS Analysis Revenue and Gross Margin Note: Information is presented on a GAAP basis Note: Q1'08 actual EPS reflects the acquisition of Komag, Inc. and a one-time net tax charge of $60M. Q2'09 includes restructuring charge of $113M (r) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY07 FY07 FY07 FY08 FY08 FY08 FY08 FY09 FY09 FY09 FY09 FY10 FY10 FY10 FY10 FY11 FY11 TAM 118.8 113.0 111.8 133.6 143.7 131.6 131.9 145.8 123.8 111.4 135.4 152.4 160.4 163.3 156.2 164.0 167.5 Share 20.7% 21.7% 22.3% 22.0% 23.9% 26.3% 26.7% 27.0% 28.6% 28.3% 29.5% 28.9% 30.9% 31.3% 31.8% 30.9% 31.2% Units (HDD) 24.5 24.5 24.9 29.4 34.2 34.5 35.2 39.4 35.5 31.6 40.0 44.1 49.5 51.1 49.7 50.7 52.2 ASP $58 $58 $55 $59 $61 $59 $56 $53 $51 $50 $48 $49 $52 $51 $47 $46 $47 Revenue $1,428 $1,410 $1,367 $1,766 $2,204 $2,111 $1,993 $2,109 $1,823 $1,592 $1,928 $2,208 $2,619 $2,641 $2,382 $2,396 $2,475 Gross Margin $255 $222 $205 $323 $513 $477 $425 $424 $290 $253 $370 $514 $687 $665 $535 $437 $475 Gross Margin % 17.9% 15.7% 15.0% 18.3% 23.3% 22.6% 21.3% 20.1% 15.9% 15.9% 19.2% 23.3% 26.2% 25.2% 22.5% 18.2% 19.2% R&D $77 $75 $79 $91 $122 $123 $128 $133 $119 $125 $132 $142 $154 $160 $154 $167 $169 SG&A $56 $32 $47 $48 $59 $56 $56 $57 $42 $49 $52 $53 $60 $64 $88 $59 $66 Other $ - $ - $ - $49 $ - $ - $ - $ - $113 $18 ($23) $ - $ - $ - $ - $ - $ - Total Operating Expenses $133 $107 $126 $188 $181 $179 $184 $190 $274 $192 $161 $195 $214 $224 $242 $226 $235 Operating Income $122 $115 $79 $135 $332 $298 $241 $234 $16 $61 $209 $319 $473 $441 $293 $211 $240 Net Income $128 $121 $212 $69 $305 $280 $213 $211 $14 $50 $196 $288 $429 $400 $265 $197 $225 EPS $0.57 $0.53 $0.94 $0.31 $1.35 $1.23 $0.94 $0.93 $0.06 $0.22 $0.86 $1.25 $1.85 $1.71 $1.13 $0.84 $0.96 Diluted Shares Outstanding 226 226 225 224 226 227 227 226 224 226 227 230 232 234 235 234 235 Top 10 Customers Revenue 49% 46% 48% 46% 47% 48% 53% 51% 49% 47% 52% 56% 55% 51% 52% 50% 48% Revenue by Channel OEM 46% 47% 47% 50% 48% 50% 57% 56% 57% 48% 54% 52% 48% 49% 54% 50% 45% Distributors 37% 34% 36% 31% 34% 34% 24% 26% 21% 30% 29% 31% 30% 33% 29% 32% 33% Retail 17% 19% 17% 19% 18% 16% 19% 18% 22% 22% 17% 17% 22% 18% 17% 18% 22% Revenue by Geography Americas 38% 36% 40% 34% 32% 28% 29% 23% 23% 26% 24% 22% 25% 24% 25% 23% 22% Europe 32% 29% 26% 33% 32% 31% 25% 29% 29% 28% 22% 22% 25% 24% 21% 23% 25% Asia 30% 35% 34% 33% 36% 41% 46% 48% 48% 46% 54% 56% 50% 52% 54% 54% 53% Compute Units Notebook 2.032 2.960 2.986 4.785 7.134 8.819 9.878 12.411 11.187 7.932 14.670 16.528 17.735 17.072 16.802 16.582 17.385 Desktop 16.519 15.399 15.731 16.674 18.331 17.834 15.863 17.484 14.225 14.659 16.349 18.282 19.290 21.461 20.282 20.918 20.411 Non-Compute Units Consumer Electronics 2.714 2.579 2.692 3.707 4.077 3.109 4.097 3.913 4.128 3.487 3.666 3.064 4.083 4.643 5.306 5.239 4.709 Branded 2.254 2.596 2.317 2.910 3.390 3.456 4.081 4.396 4.918 4.512 3.994 4.539 6.219 5.565 5.005 5.678 7.427 Enterprise Units 0.943 0.978 1.127 1.281 1.280 1.324 1.266 1.203 1.005 0.973 1.308 1.669 2.170 2.356 2.346 2.319 2.284 Total HDD Units 24.462 24.512 24.853 29.357 34.212 34.542 35.185 39.407 35.463 31.563 39.987 44.082 49.497 51.097 49.741 50.736 52.216 Amounts in millions; except per share amounts, ASP percentages. Americas 35% Asia 35% Europe 30% Americas 24% Asia 53% Europe 23% Revenue by Geography Rolling Four Quarters Ending Q2 FY08 Revenue by Geography Rolling Four Quarters Ending Q2 FY11 (CHART) (CHART) (CHART)

Page ? 2 (r) Free Cash Flow Return on Assets R&D and Capital Expenditures Gross vs. Net Cash & Cash Equivalents Business Model Gross Margin 18%-23% Operating Expense 9%-10% Operating Income 8%-14% Tax 6%-9% of Income Before Tax Capital Expenditures 7%-8% (+up to $200M in FY11 for conversion to 8" wafers) Inventory Turns 12-16 Turns Conversion Cycle 4-8 Days Note: Information is presented on a GAAP basis Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY07 FY07 FY07 FY08 FY08 FY08 FY08 FY09 FY09 FY09 FY09 FY10 FY10 FY10 FY10 FY11 FY11 Cash and Cash Equivalents $676 $704 $700 $651 $917 $917 $1,104 $1,213 $1,376 $1,579 $1,794 $2,056 $2,435 $2,826 $2,734 $2,858 $3,110 Debt $49 $27 $22 $1,018 $775 $514 $509 $507 $504 $502 $482 $463 $444 $425 $400 $375 $350 Net Cash and Cash Equivalents $627 $677 $678 ($367) $142 $403 $595 $706 $872 $1,077 $1,312 $1,593 $1,991 $2,401 $2,334 $2,483 $2,760 Cash Flow From Operations $184 $164 $154 $219 $519 $431 $229 $301 $300 $355 $349 $434 $557 $588 $363 $390 $505 Free Cash Flow $74 $94 $69 $56 $350 $294 $83 $139 $160 $249 $238 $258 $358 $411 $178 $190 $255 Capital Expenditures $110 $70 $85 $163 $169 $137 $146 $162 $140 $106 $111 $176 $199 $177 $185 $200 $250 Depreciation and Amortization $50 $55 $61 $78 $111 $111 $113 $117 $122 $119 $122 $121 $126 $128 $134 $150 $151 EBITDA $172 $170 $140 $213 $443 $409 $354 $351 $138 $180 $331 $440 $599 $569 $427 $361 $391 Accounts Receivable, Net $668 $715 $697 $985 $1,086 $1,014 $1,010 $1,082 $926 $824 $926 $1,131 $1,365 $1,257 $1,256 $1,325 $1,250 Inventory Raw Materials $17 $12 $12 $165 $171 $153 $144 $129 $124 $104 $97 $96 $102 $115 $159 $155 $141 Work in Process $90 $86 $94 $145 $131 $131 $145 $168 $159 $152 $154 $173 $212 $254 $255 $266 $274 Finished Goods $158 $145 $153 $151 $157 $171 $167 $180 $163 $129 $125 $126 $139 $138 $146 $140 $153 Inventory, Net $265 $243 $259 $461 $459 $455 $456 $477 $446 $385 $376 $395 $453 $507 $560 $561 $568 Property, Plant and Equipment, Net $637 $672 $741 $1,516 $1,560 $1,529 $1,668 $1,674 $1,620 $1,570 $1,584 $1,625 $1,696 $1,756 $2,159 $2,245 $2,277 Accounts Payable $816 $851 $882 $1,106 $1,216 $1,144 $1,181 $1,215 $1,075 $1,001 $1,101 $1,342 $1,507 $1,508 $1,507 $1,703 $1,628 Days Sales Outstanding 43 46 46 51 45 44 46 47 46 47 47 47 47 43 48 50 46 Days Inventory Outstanding 20 19 20 29 25 25 27 26 27 26 24 21 21 23 28 26 26 Days Payables Outstanding 63 65 69 70 66 64 69 66 64 68 69 72 71 69 74 79 74 Cash Conversion Cycle - - (3) 10 4 5 4 7 9 5 2 (4) (3) (3) 2 (3) (2) Inventory Turns 18 20 18 13 15 14 14 14 14 14 15 17 17 16 13 14 14 Shares Repurchased - 1.5 2.5 0.8 - 1.5 - 1.2 - - - - - - - 1.8 - Shares Repurchased $ $ - $29 $45 $16 $ - $44 $ - $36 $ - $ - $ - $ - $ - $ - $ - $50 $ - Remaining Amount Authorized $136 $107 $62 $46 $46 $502 $502 $466 $466 $466 $466 $466 $466 $466 $466 $416 $416 R4Q ROIC 34.0% 32.3% 28.7% 27.3% 31.4% 33.8% 34.0% 33.5% 22.9% 14.9% 13.9% 15.3% 24.9% 31.2% 30.2% 26.4% 21.1% R4Q ROA 19.4% 18.7% 16.8% 16.4% 19.0% 20.7% 21.2% 21.1% 14.7% 9.8% 9.2% 10.4% 17.0% 21.2% 20.7% 18.1% 14.6% Worldwide Headcount 27,055 27,277 29,572 41,263 42,534 41,876 50,072 51,409 50,838 43,898 45,991 52,208 55,128 61,803 62,500 62,817 62,991 Balance sheet, cash flows, earnings and share repurchase amounts in millions (CHART) (CHART) (CHART) (CHART)

Page ? 3 Footnotes FY08 and Q1 FY11 ASP, Revenue by Channel and Revenue by Geography exclude external sales of media/substrates Revenue by Channel, Revenue by Geography and Units excludes WD TV Media Players without hard drives, WD Livewire, SSD and media Worldwide Headcount excludes temporary employees (r) Formulas Share = Units / TAM ASP = Revenue / Units Free Cash Flow = Cash Flow from Operations - Capital Expenditures Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / 91 days) Days Inventory Outstanding (DIO) = Inventory / (Cost of Revenue / 91 days) Days Payables Outstanding (DPO) = Accounts Payable / (Cost of Revenue / 91 days) Cash Conversion Cycle = DSO + DIO - DPO Inventory Turns = 364 days / DIO R4Q ROIC = (Net Income from Continuing Operations + Interest Expense) / (Equity + Debt) R4Q ROA = Net Income from Continuing Operations / Average Total Assets