Western Digital Announces Sale of IntelliFlash Business to DDN and Intention to Exit Storage Systems

Western Digital Corp. (NASDAQ: WDC) today announced that it has entered into a definitive agreement to sell its IntelliFlash™ business to DDN, a global leader in artificial intelligence (AI) and multi-cloud data management. In addition, Western Digital and DDN have agreed to expand their existing partnership through a multi-year strategic sourcing agreement, under which DDN will increase its purchase of Western Digital’s HDD and SSD storage devices.

This announcement is part of Western Digital’s strategic intention to exit Storage Systems, which consists of the IntelliFlash and ActiveScale™ businesses. The company is exploring strategic options for ActiveScale. These actions will allow Western Digital to optimize its Data Center Systems portfolio around its core Storage Platforms business, which includes the OpenFlex™ platform and fabric-attached storage technologies.

“As we look to the future, scaling and accelerating growth opportunities for IntelliFlash and ActiveScale will require additional management focus and investment to ensure long-term success,” said Mike Cordano, president and chief operating officer. “By refocusing our Data Center Systems resources on our Storage Platforms business, we are confident that the Western Digital portfolio will be better positioned to capture significant opportunities ahead and drive long-term value creation.”

“DDN has deep technical expertise and capabilities in high performance and at scale data environments, and is well positioned to build on and accelerate the success of the business,” said Phil Bullinger, senior vice president & general manager of the Data Center Systems business. “Importantly, both Western Digital and DDN are aligned in our commitment to executing a smooth transition for all stakeholders. Western Digital will remain one of the largest consumers of IntelliFlash products, and customers will continue to receive best-in-class service and support.”

The transaction is expected to close later this calendar year, subject to the satisfaction of customary closing conditions. Financial terms of the transaction were not disclosed. Western Digital’s intended exit of Storage Systems is expected to generate an annual non-GAAP EPS benefit of at least $0.20 starting in the fiscal 2020 third quarter ending April 3, 2020. The Company will also incur restructuring and other charges, which are not determinable at this time.

About Western Digital

Western Digital, a leader in data infrastructure, creates environments for data to thrive. The company is driving the innovation needed to help customers capture, preserve, access and transform an ever-increasing diversity of data. Everywhere data lives, from advanced data centers to mobile sensors to personal devices, our industry-leading solutions deliver the possibilities of data. Our data-centric solutions are marketed under the G-Technology™, SanDisk®, WD®, and the Western Digital® brands.

Western Digital, the Western Digital logo, OpenFlex, ActiveScale and IntelliFlash are registered trademarks or trademarks of Western Digital Corporation or its affiliates in the US and/or other countries. All other marks are the property of their respective owners.

Note Regarding Non-GAAP Financial Measures

This news release discloses the non-GAAP EPS benefit expected from the transaction. Non-GAAP EPS is a financial measure that is not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The expected Non-GAAP EPS benefit disclosed herein excludes the amortization of acquired intangible assets, stock-based compensation expense, employee termination, asset impairment and other charges, charges related to cost saving initiatives and convertible debt activity. The timing and amount of these charges and additional charges that may impact the non-GAAP EPS benefit cannot be quantified and are dependent on the timing and determination of certain actions and, therefore, cannot be reasonably predicted. Accordingly, a full reconciliation of non-GAAP EPS benefit to the comparable GAAP financial measure depicting the impact of the transaction on a GAAP basis is not available without unreasonable effort.

Forward-Looking Statements

This news release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding the timing and expected impact of our strategic partnership and related transaction with DDN, business strategies and growth opportunities, and product and technology portfolio. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Key risks and uncertainties include the possibility that conditions to closing the transaction may not be satisfied, such that the transaction will not close or that the closing may be delayed; volatility in global economic conditions; business conditions and growth in the storage ecosystem; impact of competitive products and pricing; actions by competitors; unexpected advances in competing technologies; our development and introduction of products based on new technologies and expansion into new data storage markets; difficulties or delays in manufacturing; and other risks and uncertainties listed in the company's filings with the Securities and Exchange Commission (the "SEC") and available on the SEC's website at www.sec.gov, including our most recently filed periodic report, to which your attention is directed. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

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