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Matthew E. Massengill
Chairman and Chief Executive Officer
September 14, 2004
support, and corporate resources on our Web site is now available in 10 languages.
We also have begun offering in-region telephone support in areas such as
China, Taiwan, Korea, Malaysia, and Thailand to better strengthen our market
position in those locations. We are hopeful that our results from these
investments will be as good as those we’ve produced in other emerging markets.
For fiscal year 2004, approximately 41 percent of WD’s revenue was from
customers in the Americas; 30 percent from Europe, Africa, and the Middle
East; and 29 percent from Asia. We expect this geographic mix to change as the
WD brand grows stronger in emerging markets abroad.
WD products again earned awards and praise from leading trade
publications in 2003 and 2004. Honors include the VARBusiness Annual
Report Card award, PC World magazine’s World Class and 5 Star Awards,
Computer Master Magazine’sDiamond Award, PC PowerPlay’sPower Award,
a Hardware.Info Gold Award, PC User magazine’s Top Buy Award, a PC Plus
Recommended Product Award, PC Actual magazine’s Best Buy Award,
Maximum PC’s Gear of the Year Award, and a 2003 Readers’ Choice Award
from Tom’s Hardware Guide.
WD’s financial condition has remained strong, with shareholders’ equity
closing the year at a five-year high and the cash position growing after the
Read-Rite acquisition. Recognizing the company’s ability to generate free cash
flow and our commitment to enhance shareholder value, the Board of Directors
in May authorized the repurchase of up to $100 million of WD common stock.
Since this plan was approved, the company has acquired 4 million shares at a
total cost of $31 million. We may make further purchases from time to time,
consistent with capital needs and market conditions.
Our long-term outlook is good, and our opportunities are many. We aim
to maintain steady, profitable growth in desktop hard drives, further leveraging
our special position as one of the world’s leading suppliers in the industry’s
highest-volume market. We will continue to build our market position in hard
drives for enterprise-class applications, personal video recorders, and other
consumer entertainment products. We will make a measured, rational entry
into the mobile personal computer hard drive market. And, we will extend our
design and manufacturing expertise into even smaller form factor drives for
hand-held applications.
Our low-cost model is working, our products are proving attractive, and
our customer relationships are excellent. We have seasoned and enterprising
people, excellent facilities, ample financial resources, and a determination to
work ever harder to secure shareholder value. Many times in the past we’ve
overcome challenges brought about by aggressive competition. We have never
been better positioned to serve the marketplace and we are confident of our
ability to demonstrate this company’s capabilities and resolve again.
FY2002 FY2003 FY2004
0%
10%
20%
30%
PERCENTAGE OF REVENUE
FROM SALES TO ASIA
13.4%
22.0%
29.0%
Western Digital’s percentage of revenue from
sales to Asia rose to 29.0% in 2004, reflecting
the company’s continued focus on revenue
growth in emerging geographic markets.
SHAREHOLDERS' EQUITY
Dollars in millions
$0
$100
$200
$300
$400
$500
$103
$327
FY2002 FY2003 FY2004
$488
The company ended 2004 with $488 million
of shareholders’ equity and its strongest balance
sheet in over five years.