Western Digital Corporation (WDC)

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UPDATE: Western Digital Names New CEO, Replaces Retiring Coyne

Sep 10, 2012 14:26:43 (ET)

--Western Digital names Steve Milligan as CEO

--Milligan replaces John Coyne, who is retiring

--The changes are effective in January

(Updates throughout with executive comments.)

By Shara Tibken

Western Digital Corp. (WDC) said President Steve Milligan would take over as chief executive in January, succeeding John Coyne, who is retiring.

Mr. Milligan, 49 years old, will retain the title of president when he becomes CEO. Following Mr. Coyne's retirement, Mr. Milligan will be appointed to Western Digital's board of directors.

Mr. Coyne, 63, said in an interview that he wouldn't serve as a day-to-day adviser at the company following his departure as CEO; instead, he will take time to enjoy his retirement. Mr. Coyne, who joined the company in 1983, has served as CEO of Western Digital since January 2007.

"When I looked at the position the company is in, it looked like a very opportune time to hang up my spurs and pass the baton to a very qualified leader," Mr. Coyne said. "I'm very, very confident that we have the [strong] positioning of the company and leadership in place."

Shares, up 45%over the past 12 months, slid 1.4% to $41.28 in recent trading.

Western Digital has benefited recently from its $3.4 billion acquisition of Hitachi Ltd.'s (HIT) hard-disk-drive operations. And it has gotten a boost from its recovery from severe flooding that occurred in Thailand late last year. The company suspended operations there because of damaged facilities, but it has been bringing more production back online.

Mr. Milligan, who served as chief financial officer at Western Digital from 2004 to 2007, rejoined the company earlier this year following the Hitachi drive acquisition. Mr. Milligan had served as CEO of Hitachi Global Storage Technologies from December 2009 until the deal closed, and he served in other executive roles at HGST before taking over as CEO.

Mr. Milligan said in an interview Monday that there probably won't be big changes under his leadership, but he noted that Western Digital will likely accelerate its efforts to innovate its technology and take advantage of new trends like cloud computing and mobility.

"If there are changes that will be had, they'll be more reflective of the continued evolution we've seen over time in the company and the industry," Mr. Milligan said.

An example of Western Digital's effort to innovate and adapt to the changing industry is its announcement Monday of a very thin hybrid drive that will enable thin and light PCs. The drive combines hard-disk with solid state flash memory to give users high amount of storage at faster speeds.

PC makers and suppliers have been working to revitalize the sector, which is facing tepid sales. Chip giant Intel Corp. (INTC) last week cut its guidance for the current quarter as it deals with softness in the industry.

Messrs. Coyne and Milligan on Monday declined to update Western Digital's recent guidance. In July, the company had projected aggressive earnings growth for the year, though first-quarter guidance was a little light. Mr. Coyne on Monday said the PC market remains "muted," but the company sees "substantial opportunity" in the enterprise market, with growing demand for cloud computing.

He added that the company is modeling the impact from Microsoft Corp.'s (MSFT) Windows 8 rollout as similar to prior operating system introductions.

"Yes, the PC market is a little soft right now, but overall, we see the next 10years to be [a decade] of extraordinary opportunity," Mr. Coyne said.

Western Digital plans to provide details about its long-term strategy during an investor meeting Thursday. The executives will likely give more details about the HGST acquisition and what opportunities they see in the future.

The companies initially expected the deal to drive cost savings, but such benefits have been limited by regulations out of China requiring the two companies to operate separately. However, Messrs. Coyne and Milligan said they don't believe the limits by China hurt the value of the deal.

"Our primary focus on deriving value from the deal was on revenue retention, retaining all of the customers of the separate companies and leveraging the portfolios of each to continue to grow," Mr. Coyne said. "We've been fortunate to achieve that."

The companies can apply to have China review the regulations in two years, but Mr. Coyne said he's unsure whether full integration will receive approval or whether Western Digital will even seek that.

Operating separately will "allow us to make amuch more informated decision...as to how to integrate or as to what extent to integrate," Mr. Coyne said.

--Saabira Chaudhuri contributed to this report.

Write to Shara Tibken at [e-mail]

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(END) Dow Jones Newswires

September 10, 2012 14:26 ET (18:26 GMT)