XML 26 R10.htm IDEA: XBRL DOCUMENT v3.21.2
Segment Information
 3 Months Ended
Oct. 01, 2021
Segment Reporting [Abstract]  
Segment Information Segment Information
The Company manufactures, markets, and sells data storage devices and solutions in the U.S. and in foreign countries through its sales personnel, dealers, distributors, retailers, and subsidiaries. Historically, the Company had been managed and reported under a single operating segment. Late in the first quarter of fiscal 2021, the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), announced a decision to reorganize the Company’s business by forming two separate product business units: hard disk drives (“HDD”) and flash-based products (“Flash”). To align with the new operating model and business structure, the Company made management organizational changes and implemented new reporting modules and processes to provide discrete information to manage the business. Effective July 3, 2021, the Company’s management finalized its assessment of the Company’s operating segments and concluded that the Company now has two reportable segments: HDD and Flash.

The CODM evaluates performance of the Company and makes decisions regarding allocation of resources based on each operating segment’s net revenue and gross margin, which are summarized below. Because of the integrated nature of the Company’s production and distribution activities, separate segment asset measures are not available or reviewed by the CODM to evaluate the performance of or to allocate resources to the segments.

The following table summarizes the operating performance of the Company’s reportable segments:

Three Months Ended
October 1,
2021		October 2,
2020
(in millions)
Net revenue:
HDD$2,561 $1,844 
Flash2,490 2,078 
Total net revenue$5,051 $3,922 
Gross profit
HDD$792 $483 
Flash921 548 
Total gross profit for segments1,713 1,031 
Unallocated corporate items:
Amortization of acquired intangible assets39 145 
Stock-based compensation expense9 12 
Charges related to a power outage incident and related recovery— (30)
Total unallocated corporate items(48)(127)
Consolidated gross profit$1,665 $904 
Gross margin:
HDD30.9 %26.2 %
Flash37.0 %26.4 %
Consolidated gross margin33.0 %23.0 %
Disaggregated Revenue

The Company’s broad portfolio of technology and products address multiple end markets. In the fiscal first quarter of 2022, the Company refined the end markets it reports to be Cloud, Client and Consumer. Cloud represents a large and growing end market comprised primarily of products for public or private cloud environments and end customers, which the Company believes it is uniquely positioned to address as the only provider of both hard drive and flash products. Through the Client end market, the Company provides its original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance flash and hard drive solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by the Company’s broad range of retail and other end-user products, which capitalize on the strength of the Company’s product brand recognition and vast points of presence around the world.

The Company’s disaggregated revenue information is as follows:
Three Months Ended
October 1,
2021		October 2,
2020
(in millions)
Revenue by End Market
Cloud$2,225 $1,291 
Client1,853 1,750 
Consumer973 881 
Total Revenue$5,051 $3,922 
Revenue by Geography
Americas$1,614 $1,079 
Europe, Middle East and Africa762 629 
Asia2,675 2,214 
Total Revenue$5,051 $3,922 

The Company’s top 10 customers accounted for 43% of its net revenue for the three months ended October 1, 2021, and 44% of its net revenue for the three months ended October 2, 2020. For the three months ended October 1, 2021 and October 2, 2020, no single customer accounted for 10% or more of the Company’s net revenue.

Goodwill

In connection with the Company’s determination of its reportable segments, effective July 3, 2021, the Company allocated its goodwill between its segments based on the estimated relative fair values of the business units. In addition, management performed a goodwill impairment assessment for each segment and concluded no impairment indicators as of both the beginning and end of the three months ended October 1, 2021. The following table provides a summary of goodwill activity for the period.

HDDFlashTotal
(in millions)
Balance at July 3, 2021$4,328 $5,738 $10,066 
Foreign currency translation adjustment— — — 
Balance at October 1, 2021$4,328 $5,738 $10,066