During a recent conference, Western Digital (WDC, Financial) highlighted ongoing challenges, expecting volatility to persist in the coming quarters. The company updated its Q2 outlook, projecting earnings per share (EPS) at the lower end of its previous guidance of $1.75-$2.05, due to pricing pressures in its flash segment, affected by weak PC OEM and consumer markets.

• Western Digital, like Micron (MU, Financial), is experiencing strong demand in cloud and data centers, driving significant growth in its HDD business, with an 85% year-over-year revenue increase in Q1. This trend is expected to continue in FY25, supported by the adoption of WDC's UltraSMR product line by cloud customers. Despite this, the Consumer segment remains weak, with Q1 revenue down by 7%.
• In its Q1 earnings call, WDC anticipated a recovery in the Consumer and Client markets, including PCs and automotive applications, by CY25. While maintaining its revenue guidance offers some relief, the lack of improvement suggests the recovery is still sluggish.
• WDC also announced CFO Wissam Jabre's departure following the planned spin-off of its flash business in February. The company's Board approved separating the flash and HDD businesses into independent entities, expected to unlock value by allowing separate market valuations.

Overall, WDC's updated guidance reduces uncertainty ahead of its Q2 earnings report on January 29. However, challenges in the flash business continue to counterbalance strengths in data centers. The upcoming earnings report will focus on Q3 guidance, with attention on the consumer business recovery.