"Western Digital is executing very well and we are seeing strong market volumes, coupled with very lean industry inventory levels as we progress into the December quarter," said Matt Massengill, chairman and chief executive officer. "Our ability to effectively manage technology transitions, to respond quickly to changes in market demand, and to meet changing customer roadmap requirements-while keeping delivery commitments-have enabled us to grow the business profitably. The performance of our manufacturing and development operations in achieving exceptional quality, strong yields, and lower costs has been especially noteworthy. In the first quarter, we also retained time-to-market leadership with shipments of our new 200 GB 7200 RPM hard drive, representing the fourth consecutive generation of Western Digital delivering the industry's highest capacity, highest performance desktop product.
"Our gross margin in the first quarter was over 14% for the first time in five years, reflecting strong execution by our operations teams and improved industry inventory management," Massengill noted. "Operating expenses remained well under control at 10% of revenue, demonstrating our capability to add incremental revenue without corresponding growth in our expense structure."