Bob Blair - Investor Relations John F. Coyne - President, Chief Executive Officer, Director Tim Leyden - Chief Financial Officer, Executive Vice President - Finance

Steven Fox - Merrill Lynch Sherri Scribner - Deutsche Bank Mark Moskowitz - J.P. Morgan Richard Kugele - Needham & Company Robert Marson Mark Miller - Brean Murray, Carret & Co. David Bailey - Goldman Sachs Aaron Rakers - Wachovia Jeff Brickman - CVS Yun Pak - BMO Capital Markets Christian Schwab - Craig-Hallum Capital Scott Craig - Banc of America

Good afternoon and thank you for standing by. Welcome to Western Digital's third quarter financial results for fiscal year 2008. (Operator Instructions) Now I’ll turn the call over to Mr. Bob Blair. You may begin.

Thank you. As we begin, I would like to point out that we will be making forward-looking statements in our comments and in response to your questions concerning our opportunities and demand in the hard drive industry; customer preference for the WD brand; our capital expenditures; repurchases of our stock; our short-term investments; our cash conversion cycle; seasonality of the June quarter; and our current financial outlook for the June quarter. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including those listed in our 10-Q filed with the SEC on February 5, 2008 as well as the additional risk factors reported in the press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC today. We undertake no obligation to update our forward-looking statements to reflect new information or events and you should not assume later in the quarter that the comments we make today are still valid. I would now like to turn the call over to John Coyne, President and Chief Executive Officer of Western Digital. John F. Coyne: Thank you, Bob. Good afternoon, everyone and thank you for joining us. With me today is CFO Tim Leyden. The market for hard drives continued to demonstrate strong year-on-year unit growth of 16.2% in the March quarter, while exhibiting an 8.6% seasonal decline from the exceptionally strong December quarter, as we had anticipated in our original guidance for the third quarter issued on January 23rd. We are extremely pleased with the March quarter results we released earlier today. The WD team again delivered excellent performance, continuing our strong track record of profitable growth. Our Q3 revenue performance reflects customer preference for the WD value proposition of quality and reliability, a compelling product portfolio, and responsive and timely availability, supported by a demonstrated willingness and capability to invest in the future. Our earnings performance is the result of healthy market demand, a competitive cost structure, disciplined financial management, and a committed team with a passion to succeed. Let me share some highlights of our March quarter performance compared with the same quarter last year: hard drive revenues rose by 43% to $2 billion and 22 million; hard drive unit shipments grew by 41% to 34.5 million; earnings per share expanded by 132% to $1.23; gross margins increased 680 basis points to 22.6%. We continued to demonstrate financial and operational discipline, generating substantial cash from operations and maintaining our industry-leading asset velocity. From the beginning of the quarter we focused closely on sales linearity and achieved a significant improvement in performance year-on-year. Our sales in the final week of the quarter were 9.8% of our total quarter volume, compared with 13% in the same week a year ago. As we watched demand and supply patterns emerge throughout the quarter, we made the decision to shut down our component and drive factories for substantially all of the last week of the quarter. We did so in order to balance our supply with demand and ensure that we created no overhang of inventory to pressure the seasonally-weak June quarter. Consequently our total inventory remained flat quarter-on-quarter at an industry leading 25 days, which included finished goods up modestly by less than one day of supply. This supply/demand alignment action reduced gross margins in the quarter by some 60 basis points. Reflecting our confidence in the future of the hard drive industry and WD’s strategy and business model, we announced a new share buyback authorization of $500 million over five years. We continue to grow faster than the industry in practically all market segments we serve -- desktop, enterprise, branded and mobile. The one exception to the WD growth story in the March quarter was our DVR business where, consistent with our January commentary, we chose to reduce our volumes in order to improve profitability in that business. A key driver of our success is our focus on product quality and reliability. During the quarter, WarrantyWeek published an analysis of five-year warranty claim trends for U.S. tech companies. This data highlights significant and consistent improvement by WD over the last five years. We have lowered the cost of warranty claims from an industry competitive 1.9% of revenues in 2003 to a clear industry leadership position of 0.9% in calendar year 2007. At the same time, we have extended our average warranty period by some 50%. While these improvements fall straight to the WD bottom line, more important is the fact that our customers also benefit substantially from the lower cost of ownership of WD drives and enhanced customer perception of systems which incorporate WD drives. Earlier this week, we announced availability of the WD VelociRaptor 2.5-inch 300 gigabyte 10,000 RPM hard drive, the next generation product in our popular WD Raptor enterprise SATA family. This is the fastest SATA drive available in the industry today, delivering a 35% performance improvement over the WD Raptor drive. At 300-gigabytes, it delivers the industry’s highest capacity in a 2.5-inch 10,000 RPM drive, double that currently available from competition. It incorporates the highest areal density shipping in the industry, at 290 gigabits per square inch. Our IcePack adapter allows the drive to be mounted in a 3.5-inch drive bay while reducing operating temperature some seven degrees further improving long-term reliability. WD VelociRaptor continues our industry-leading GreenPower initiative launched last July by delivering all of these attributes while consuming 35% less power than the previous Raptor family. This product demonstrates the continued momentum in WD’s development and deployment of leading technologies and further enhances our broad product portfolio. In summary, we are pleased with our sustained progress against our profitable growth objective year to date. We continue to feel good about the robust demand forecasted in our industry over the next several years and about WD’s opportunity to continue to prosper by providing compelling solutions to customers. Tim will now provide a Q3 financial report and our outlook for Q4. Tim.

Thank you, John. Our March results reflect strong execution by the WD team. Throughout the quarter, we leveraged our operational flexibility and financial management discipline to carefully match supply with demand. This resulted in outstanding revenue growth and operational results that delivered 680 basis points of gross margin improvement over the same quarter last year and revenue and earnings that exceeded our updated guidance. A strong January and February, coupled with a measured approach to March’s more competitive environment, led to better revenue linearity for WD year-on-year, enabling us to generate $431 million in operating cash flow and pay down $260 million in debt, while also repurchasing $44 million of common stock. Revenue for our third fiscal quarter was $2.1 billion. This includes $89 million from external sales of media and substrates. Hard drive revenue of $2.022 billion was up 43% from the prior year and hard drive shipments totaled 34.5 million units, up 41% from the prior year period. Average hard drive selling price was approximately $59 per unit, down $2 from the December quarter and up $1 from the year-ago quarter. Product and channel mix changes as well as expected seasonal pricing factors contributed to the quarterly ASP decline. The percentage of our hard drive revenue generated by non-desktop PC applications was 54% in the March quarter, consistent with the December quarter, and it was 47% for the year-ago quarter. We shipped 10.2 million 2.5-inch mobile drives in the March quarter, as compared to 8.7 million in the December quarter and 3.7 million in the year-ago quarter. These increases were driven by continued strength in overall mobile storage demand coupled with increased customer preference for WD product offerings. Sales in our desktop, enterprise and branded products businesses were in line with our expectations. In consumer electronics, we shipped 3.1 million 3.5-inch drives for use in digital video recorders in the March quarter versus 4.1 million in the December quarter and 2.6 million in the year-ago quarter. Our moderation of unit shipments in this market generated the desired outcome of improved margins. We continue to believe that this market offers us long-term profitable growth opportunities. Hard drive channel revenue was 50% OEM, 34% distribution and 16% branded products versus 48% OEM, 34% distribution and 18% branded in the December quarter; and it was 47% OEM, 34% distribution and 19% branded in the year-ago quarter. These percentages exclude external sales of media and substrates, which totaled $89 million in the March quarter, or 4% of revenue, and $120 million in the December quarter, or 5% of revenue. As a reminder, there were no media and substrate sales in the year-ago quarter as we had not yet made the media acquisition. There was no single customer that comprised more than 10% of total revenue, reflecting a healthy diversity of customers in multiple markets. The Q3 geographic split of our hard drive revenue was 28% Americas, 31% Europe and 41% Asia, as compared to 32% Americas, 32% Europe and 36% Asia in the December quarter; and it was 36% Americas, 29% Europe and 35% Asia in the year-ago quarter. These percentages also exclude external sales of media and substrates. Our gross margin percentage for the quarter was 22.6% versus 23.3% in the December quarter and 15.8% in the year-ago quarter. The decrease in gross margin versus Q2 came from more competitive pricing, a higher OEM mix and the negative impact of our one week factory shut down, offset by increased volume and improved cost. Operating expenses totaled $179 million, or 8.5% of revenue. Total operating expense was slightly down from the December quarter. As compared to the prior year, operating expenses are up as a result of adding media operations, higher incentive compensation associated with stronger financial performance, and increased investments in new programs to support technological advancements and our broadening product portfolio. Operating income was $298 million, or 14% of revenue. Interest and other non-operating expenses were approximately $8 million. This includes about $3 million of unrealized losses on our previously disclosed investments in auction-rate securities. These investments totaled $30 million at the end of the quarter. Our $10 million tax provision for the March quarter is approximately 3.5% of quarterly income before taxes and the year-to-date rate is approximately 4%, excluding Q1 non-recurring items. We expect that our rate for the full year will continue to be at the low end of our previously stated 4% to 6% range. Our net income totaled $280 million, or $1.23 per share. In March we announced a realignment of our media operations related to the planned completion of the majority of our external media and substrate supply obligations. The total estimated cost of this realignment is about $16 million. This was recorded as an adjustment to the goodwill balance as of the end of the quarter and did not impact March’s operating results. We continued to make excellent progress on our media integration and are on track to meet our previously stated plans of full integration by the December quarter. Turning to the balance sheet, our cash, cash equivalents and short-term investments at the end of the quarter totaled $949 million as compared to $967 million at the end of December. Cash generated from operations during the quarter totaled $431 million. Capital expenditures for the quarter of $137 million were lower than our original expectation. Our non-cash charges for depreciation and amortization expense totaled $111 million. For the first nine months of 2008, our capital expenditures totaled $469 million. We now expect capital expenditures to be about $625 million for fiscal 2008, about $75 million lower than our most recent guidance as we align expenditures with anticipated demand and realized efficiency gains. Fiscal 2008 depreciation and amortization is expected to be about $410 million. We reduced debt by a total of $260 million during the March quarter. We repaid the $760 million bridge loan and replaced it with a five-year credit facility that consists of a $500 million term loan, which is currently outstanding, and a currently unutilized $250 million revolving line of credit. We also repurchased approximately 1.5 million shares of common stock for $44 million. Since May 2004, we have repurchased 16.6 million shares at a total cost of $248 million, for an average price of about $15 per share. Earlier this month, we announced an increase to our stock repurchase plan of $500 million. Going forward, we will weigh opportunities to repurchase our stock against other investment opportunities and prepayments of our outstanding debt as we take our typical opportunistic approach to share repurchases. As of the end of March, we had cash and cash equivalents of $917 million and short-term investments of $32 million, which included $30 million of auction-rate securities. These auction-rate securities are currently accounted for as current assets and are held as available for sale securities. However, if the liquidity of these securities continues to be constrained by the market, we may have to reclassify them as long-term investments. As of the end of March, we had 44 days of receivables outstanding, 25 days of inventory, or 14 turns, and 64 days of payables. This resulted in a cash conversion cycle of 5 days, which is within our stated model range of 4 to 8 days. Going forward, we expect to trend towards the high end of that range as we weigh working capital investments against opportunities for growth in new markets and opportunities to reduce shipping costs. I will now discuss our expectations for the fourth quarter of our fiscal year 2008. Revenue for the March quarter included $89 million from the sales of media and substrates to external customers. As we indicated previously, we will not in future be breaking out the amount of revenue generated from these external sales due to the planned reduction in these activities and the expected insignificant impact on our total revenue. Historically, drive demand goes down sequentially from the March to June quarter by approximately 2% to 3%. We would normally expect natural demand reductions in this range. However, late March competitive market dynamics now lead us to forecast a reduction of 4% to 6% and competitive pricing at the high end of historical norms in the June quarter. Consequently, we are forecasting total revenues to be in the range of $1.825 billion to $1.9 billion. This represents an increase of between 34% and 39% over the prior year period. We are modeling gross margin of approximately 20%. While this is down from the March quarter, it represents a 500 basis point increase over the 15% gross margin we reported for the June quarter of 2007. Operating expenses are projected to be approximately $180 million as we continue to invest in expanding our product and technology portfolio. Our net interest expense is projected to be about $5 million, assuming no further investment losses. We anticipate our tax rate to be at the low end of our previously stated range of 4% to 6% of pretax income, and our share count to be approximately flat with the March quarter. Accordingly, we estimate earnings per share of between $0.77 and $0.83 for the June quarter. Operator, we are now ready to open the call up for questions.

(Operator Instructions) Our first question comes from Steven Fox. Steven Fox - Merrill Lynch: I was wondering if you could go back over a couple of things. You mentioned how you made a decision to close production in the last week of the quarter. Could you give us some more insight to how that decision was made, on what timing? And is it possible that you would consider to do the same thing and for a longer period in the June quarter, given the demand pressures or the economic concerns that are out there? And then I had a follow-up. John F. Coyne: We, as I mentioned, we track the progress of the market and our progress in the market on a weekly basis and we make decisions on what we are seeing in those market dynamics relative to matching our supply with the demand that we anticipate, updated by those weekly pulsing of the market. And we did that through last quarter and we made appropriate decision to reduce production in order to ensure that our ending inventories were appropriate to the forward-looking demand and didn’t overhand the market. We will watch progress as we go through this quarter and we will align our production to the demand. Steven Fox - Merrill Lynch: Could you also talk about the decision on the capital spending plans? What does that -- how much of that is efficiency related versus more conservative demand outlook for say the next 12 months? John F. Coyne: I think the demand outlook, we believe that the fundamental dynamics, the demand for storage growing at about 60% on an annual year-over-year basis in terms of petabytes of storage, serve us to buy a 40% to 45% areal density growth and a 15% plus unit growth. We believe those forecasts of demand remain intact. That’s the kind of demand profile I expect as we look forward. We believe that the seasonality of the business is fundamentally tracking to historical norms. As you look at that long-term outlook, the primary influence on our deferral of capital investment was realized efficiency gains of our existing installed capacity base. Steven Fox - Merrill Lynch: Okay. Thank you very much.

Sherri Scribner, you may ask your question and please state your company name. Sherri Scribner - Deutsche Bank: We’ve heard a lot of comments from Seagate and others about aggressive pricing in the March quarter. Can you maybe give us a little more detail in terms of where you saw aggressive pricing? I think Seagate commented that they saw it on high [cap] and desktop. There were some comments that there was aggressive pricing in notebook OEM. Can you maybe give us some more detail there? John F. Coyne: Well, the drive business continues to be a competitive business. We did see some greater than anticipated pricing action in late March, particularly. And as I noted, we had put a lot of emphasis with our sales force and our business teams to improve the linearity of our sales efforts through the March quarter, and we achieved that to a very large degree, shipping under 10% of our total units in the final week of the quarter. Our data from the industry would suggest that the rest of the industry shipped about 16.5% of their total units in the final week of the quarter. And we believe that that puts significant pressure on pricing as the quarter closed, leading to a start point for the current quarter that is lower than we would have liked to see. However, if you -- the guidance that Tim gave a moment ago indicates that we expect to see that end of March exit influence pricing this quarter, having it trend towards the higher end of seasonal normal pricing, and we saw a little bit of a slow start influenced by the inventory overhangs that were present starting the quarter. But the underlying trends quarter to date meets our expectations. Sherri Scribner - Deutsche Bank: I guess I wonder, is the pricing worse than what you saw last year when we had aggressive pricing in notebook, or would you say it’s relatively similar? I mean, you said that it was a little bit worse than you would have expected. John F. Coyne: I think the profile is pretty much towards the high-end of the pricing activity that we see, but you have to bear in mind that the entire industry -- well, certainly WD is running 500 basis points higher on the gross margin level this year than last in terms of our guidance for the quarter. So I think the industry is in much better shape but the overall seasonality overlays an industry that is in fundamentally better shape. Sherri Scribner - Deutsche Bank: Okay, that’s helpful. And then maybe if I could squeak in a question about your gross margin; how much did the Komag acquisition help your gross margins this quarter and how much more do you expect to get out of the Komag acquisition as we move through the calendar year?

You’ll recall we indicated that we had gotten 80 basis points in the December quarter. We added another 40 basis points approximately in this quarter, and that leaves us to pick -- up over the next three quarters, we have to pick up the remaining 180 basis points of the 300 basis point cost improvement that we indicated we were going to get by the end of December. Sherri Scribner - Deutsche Bank: Okay, great. Thank you.

Mark Moskowitz, your line is open. Mark Moskowitz - J.P. Morgan: A few questions, if I could, John and Tim. When you talk about the guidance as far as the ranges you gave for the industry growth and your revenue growth, how should we think about the puts and takes in terms of your unit expectations relative to that 4% to 6% decline, as well as your ASPs? Are you going to grow at or below market?

Actually, from an ASP viewpoint -- we don’t go into units but from an ASP viewpoint, from Q3 to Q4 we see historically price declines being at the upper end of the spectrum due to seasonally lower demand and lower mix upgrades due to a higher percentage of our business going into the OEM channel, which means because it’s a weaker -- it’s a weaker quarter for both retail and the distribution spot market. So consequently, we would expect the ASPs to be down similar to what they have been historically. Mark Moskowitz - J.P. Morgan: Okay, and then how should we think about the retail performance in the quarter? You’ve enjoyed great momentum there over the past couple of years because of sound execution and a very good product reception, but I was kind of perplexed by the slowdown there sequentially. John F. Coyne: Well, I think the -- we are very happy with our continued position in the branded products area and the retail area. There is one WD specific issue in that we were transitioning from our older passport industrial design to our new offering, so we were moving from the any color you want as long as it’s black to our new palette of 15 different colors and finishes, as well as segmented market functionality with products targeted at individual markets. So we constrained sell-in in order to flush the existing inventories out of the retail channel. Our sell-out was robust. However, we constrained sell-in in order to clear the existing inventories before restocking with the new product line. Mark Moskowitz - J.P. Morgan: Okay, so that was deliberate then -- there was no sort of issue in terms of disruption as you tried to move to that more broad-based industrial design? John F. Coyne: No surprises. Mark Moskowitz - J.P. Morgan: Okay, and then how should we think about that snap-back then, relative to your broader industry comments? Could you maybe have some wiggle room there where retail maybe bounces back a little better in June?

I think that seasonally, retail in the June quarter tends to be -- it tends to be the weakest quarter of the year for retail, so I would anticipate something similar in the June quarter. Mark Moskowitz - J.P. Morgan: Okay, and then just lastly, can you maybe just talk about what you are seeing in Europe? Particularly, your Europe business I think has been really strong on the retail side and a lot of comments from some of your peers and some of the distis out there are suggesting that Europe is starting to really exhibit signs of some deterioration as saw start in the U.S. about six months ago. John F. Coyne: I think if we looked at the quarter to date pattern, Europe is a little slow out of the traps from a distribution perspective. Overall, the business is tracking exactly as on a worldwide basis -- the industry is tracking as we expect. A little stronger in OEM, a little weaker in European disti. Mark Moskowitz - J.P. Morgan: Okay. Thank you.

Rich Kugele, you may ask your question and please state your company name. Richard Kugele - Needham & Company: Good afternoon. Two quick questions; first, on your notebook share, obviously you’ve gained a fair amount in recent quarters. Have you sensed any indications from the OEMs that they are uncomfortable with that level of share that Seagate sometimes hears their enterprise business? Or do you think that any share improvements that happen at Seagate as they get more on par on areal density can come out of other people, that that doesn’t necessarily have to come out of you? John F. Coyne: Our current position in notebook is driven by our product portfolio, our execution relative to timely availability, and our quality and reliability demonstration, allied to our forward-looking roadmap for products in that space. So we are certainly not seeing any signs of customer resistance to that compelling value offering. Richard Kugele - Needham & Company: Okay, and then just lastly to follow-up on your prepared comments there on the VelociRaptor, I mean effectively, unlike the previous Raptor which had been somewhat more of a niche product accepted by the high performance community, this one really is an enterprise 2.5-inch in a 3.5-inch clothing. Can you just talk about how much of a leap it is to take this product and actually make it a 2.5-inch enterprise class SASS for example, or the next leap in technology to get it to be a pure play enterprise? John F. Coyne: Well, I think as I mentioned, the product is a very significant demonstration of our continued momentum in technology deployment, offering as it does a leading areal density in the industry today. You are correct; we are selling it in the 3.5-inch clothing, targeted specifically at the high performance workstation and the high energy gaming environment, where the Raptor has established a very powerful brand position for us. However, as a 2.5-inch drive, it is also targeted at the blade server market in that SATA drives plug into SASS [back links]. So we expect to see some significant opportunity there. As to the rest of your question, you know we never announce product until it is [shipping in bulk]. Richard Kugele - Needham & Company: Okay. Thank you very much.

Robert Marson, your line is open. Please state your company name.

Good afternoon, gentlemen. Congratulations on an excellent quarter and stellar execution. The recent reports have now sort of tallied up last year’s unit growth at over 500 million units and about 18% or 19% in the hard disk drive space. That’s a material acceleration from the prior three or -- two or three years, anyway. Do you see unit growth maintaining a mid-teen level for your fiscal ’09? And do you think that you guys can continue to grow market share or maintain share in the external drive business as well as the 2.5-inch business? And the reason I ask that is obviously your run-rate exiting last quarter was significantly higher than it was 12 months ago and I’m just wondering if you would have any opinion as to where it might be 12 months from now. Thank you. John F. Coyne: Sure. Let me separate the two parts of that question. To the overall market, we think what we are seeing is the impact of the non-PC content driven demand for storage -- that is, last year as you said, over 500 million drives shipped against a roughly 300 million PC systems in the year, so a significant greater than 1-to-1 attach rate, drives versus PCs. We believe a lot of that is being driven by rich content through the Internet, through Flash enabled small mobile devices like cameras and audio players creating significant incremental types of demand that may be hooked to a PC or may be delivered through a completely separate device, such as a DVR. So we are very positive about those additions to the traditional underlying demand drivers and so we do believe that the 15%, 12% to 15% forecasts that are around are more driven by historical trend analysis than they are by that opportunity analysis of content generation. So I believe the opportunity is in the 15%-plus unit growth opportunity over the next few years. To your question about WD, our focus is to continue to provide the WD value proposition of high quality, higher reliability, high availability and responsiveness, a very competitive offering supported by the industry’s lowest cost business model, and using our investments in technology to maintain compelling product portfolios. I think if we can keep doing that, the customers are voting that they like it.

And one final point or question -- how do you sort of feel about the entire industry’s profit margin structure and sustainability thereof? I know that in the last four quarters, Western Digital and Seagate have made money. Hitachi for the full trailing 12 months has struggled and the other Asian companies have either broken even or lost money. When I look at -- when I try to roll up the businesses as best I can, I come to a high single, mid to high single-digit operating margin for the business. Do you feel there has been enough consolidation in addition to organic unit growth opportunities for the whole industry, so that existing pricing structures and profit margin structures can continue within the business, with Hitachi trying to become more profitable? Thank you. John F. Coyne: I think there is -- you know, when we look at consolidation, I don’t think there is any compelling trigger to drive further consolidation in the industry. The way we look at the industry today, you’ve got Seagate, a very large, very capable, very profitable company generating significant cash. You’ve got Western Digital, a not so big, well-managed, low cost, high profit, high cash generation business. You’ve got Hitachi, who seem to be finally focusing on the fundamentals of cost structure appropriate to the market opportunities available to them and driving towards a positive outcome. And then the three -- Toshiba, Fujitsu, and Samsung -- essentially all dependent on the single merchant head supplier, TDK, for their products. And if you look at the financials of TDK, I think that’s where you see where the value is being captured. However, Fujitsu, Toshiba, and Samsung, as well as Hitachi, being divisions of large Asian corporate owners, it appears to me that as long as they product marginally positive results on an ongoing basis, they will potentially keep being funded. However, we have seen evidence over the last year-and-a-half to two years that where they deliver negative results, the parents to not have the patience to allow that to continue for extended periods.

You’ve made your intentions known to enter the enterprise businesses. Is there any -- and your chief competitor, Seagate, has sort of done its fair share in the consolidation movement. Is there any change you would try to purchase an enterprise drive business were it to become available? John F. Coyne: We are looking at all business segments in which we currently don’t participate and assessing the business cases for all of those opportunities. Our experience tells us that organic growth has been the thing that has generated the best results for us. As we’ve watched the outcomes of other people’s horizontal acquisitions at the drive level, while we have focused on vertical acquisitions at the component level and so we don’t currently have any designs on anything other than growing into segments in which we don’t participate where we can close a business case to generate profitable growth from that activity.

Thank you very much and congratulations on an excellent quarter. You don’t have a lot of sponsorship on the street, so you won’t get a lot of congratulations on the call, so I guess I need to do two or three of them. Again, congratulations.

Mark Miller, you may ask your question and please state your company name. Mark Miller - Brean Murray, Carret & Co.: I would certainly like to add my sentiment to the last gentlemen and also agree with his ponderance of why you are not getting more support on the street after an exceptional quarter. I just have a couple of questions. One is the mobile -- you’ve grown very strongly in the mobile units. How are the margins doing there? Are you getting better margins with this growth? Are you maintaining margins?

We’ve been very cost competitive in our mobile product lineup and once again I can reaffirm that our margin hierarchy is still intact, which is enterprise, branded products, mobile, desktop, and DVR or CE. Mark Miller - Brean Murray, Carret & Co.: My second question is are you able to translate your technology leadership in the 3.5 space into share gain at the high end? Are you seeing any share gains at the high end, the higher capacity points? John F. Coyne: In 3.5? Mark Miller - Brean Murray, Carret & Co.: In 3.5. John F. Coyne: We’ve chosen to deploy our technology first at the volume end of the 3.5-inch market, so we deployed first on our single SATA products and we are moving that technology across the broad range of our overall product line. That’s the strategy that appeared to us to generate the optimal impact on our bottom line, and that deployment across full product range is going very well. Mark Miller - Brean Murray, Carret & Co.: Thank you.

David Bailey, you may ask your question. Please state your company name. David Bailey - Goldman Sachs: I was wondering if you could give us a little bit more detail on where you are seeing the most pricing, either by segment or product area. John F. Coyne: I think we’ve seen most -- I mean, most of the pricing movement has been in the high cap desktop arena. We’ve seen also some pricing activity as more folks have come into the current technology deployment in the 2.5-inch space, so as people have showed up with more cost effective 160s and with 250s and now beginning to see some 320 volumes coming into the market, that’s having an impact on the high-end pricing of the 2.5-inch space as well. David Bailey - Goldman Sachs: Great, and could you tell us where you think channel inventory is at this point?

Channel inventory is in the normal four to six week range, although as Seagate indicated, it is at the higher end of that metric. David Bailey - Goldman Sachs: And where are you, do you think?

We are within our normal four to six week range. David Bailey - Goldman Sachs: Thank you.

Aaron Rakers, your line is open. Please state your company name. Aaron Rakers - Wachovia: Thank you for taking the question. I guess I want to dig a little bit more into the gross margin line. If we think about your positioning over the last few quarters in the high capacity notebook market and we think about the competitive landscape going forward, how much has that been a contributor to the gross margin trend? And how should we think about that going forward, as you just mentioned that pricing is starting to look a little bit more aggressive there?

Well, in the notebooks specifically, as I indicated to a prior questioner, we’ve got the very cost effective platform and we have benefited from a higher mix, as you indicate. And we have seen more competition in the March quarter at the 250-gigabyte capacity point and at the higher-end, so we do anticipate that there will be a more balanced competitive environment in that going forward. But again, our most sustainable advantage is our cost competitiveness and we feel pretty comfortable that we would be able to deal with the competitive situation as it arises. Aaron Rakers - Wachovia: And when I look at your geographical mix in this last quarter, it looks like North America was down quite a bit on a sequential basis, as well as Europe. Can you give us an idea of what you are seeing in terms of just demand from a geographical perspective?

From a geographical point of view, the primary factor in the shift from North America to Japan is primarily in the increase in our -- sorry, to Asia is the increase in our notebook shipments, because most of the OEMs and delivery points are in Asia for notebook. We are seeing North America with normal -- what we would consider normal demand, albeit a little bit softer in North America versus Latin America. Aaron Rakers - Wachovia: Okay, and then final question for me is when we again look at the retail business, I can understand the transition from a product line perspective, but are you starting to see competition become more effective in that market, i.e. through competitive solutions or just through the breadth of their own channels?

No. Aaron Rakers - Wachovia: Fair enough. Thank you.

Jeff Brickman, you may ask your question and please state your company name. Jeff Brickman - CVS: Just a couple quick questions; just on the R&D side of things, you guys have been absolutely pretty incredible at staying at kind of the leading edge technologically and yet you have less than half the R&D spend of some of your competition. I’m just wanting to kind of understand longer term -- do you think that you can continue to do that or maybe should we expect you to kind of go back to the model that you had more a couple of quarters ago and historically where you look to spend a little bit less and then go after markets as they mature? John F. Coyne: I think we have guided that the long-term expectation is that we will be in the 9% to 10% range on OpEx, of which R&D is a large component. But we will continually strive to be highly efficient in the leverage we get out of that dollar spending. Jeff Brickman - CVS: Okay, thanks. And just on -- just one other question, just on notebooks, and I know it’s been kind of asked a couple of different ways but as you look at the market now and you clearly have a bit of a technological advantage. It sounds like a lot of customers, particularly OEMs, are looking to really get your product when and where they can. How do you kind of weigh your relative position versus the potential for price aggression? Do you think you can combat some of it by just obviously having a bit of an advantage there? Or is this going to be a scenario kind of like we saw in high cap last year where there’s basically enough parity or at the very least, people can kind of stack stuff together to be aggressive? John F. Coyne: Well as Tim said, our focus is -- on the cost side, we have a very high focus on designing for cost and then executing for low cost. And I think that’s a differentiator in that when we addressed the 2.5-inch market five years ago and put our plans together and began to design product, we fast forwarded to the present day where we are rapidly approaching the point where the volumes of 2.5 are going to cross over the volumes of 3.5. And so it’s a -- when we sat down to go look at that business, we said it was going to be a high volume business of similar scale to desktop and therefore that the cost profiles would be similar. And we set out to design a solution to that and we’ve achieved that. I think some of the incumbents, some of the more traditional suppliers of 2.5-inch drives are lumbered by a fundamental design approach that does not acknowledge those kind of market requirements. And consequently, they have a fundamental cost penalty in attempting to address that market. And I think our customers clearly recognize the quality and reliability has not been compromised by our approach. We are delivering the technology. We are delivering the product capacities and performance levels they want and we are doing that with a very solid credible forward roadmap and manufacturing and supply chain structure that they have confidence will deliver the values that they need over time. Jeff Brickman - CVS: Great. Thank you very much.

[Yun Pak], your line is open. Yun Pak - BMO Capital Markets: I want to ask about your share repurchase program. Over the last few years, you guys have purchased about $50 million worth of shares. And with your new share authorization, I was wondering if you are going to ramp that up to about $100 million for the duration of the program, or how aggressive will you guys be?

Well, as I indicated in my remarks earlier, we will weigh the repurchase opportunities against investment opportunities in other areas, and we will look at repayment of outstanding debt. We haven’t placed any constraints on our potential behavior there, so we are taking an opportunistic approach and where we see that the stock is undervalued and that it is a very good investment, we will take advantage of that as we see the opportunities arise. Yun Pak - BMO Capital Markets: Okay and one other question on your CapEx, the $75 million cut, can you talk about where, what parts of your business are you guys cutting in terms of capital investment?

As John indicated, it’s basically better equipment utilization in drives and components right across the business, and that’s effectively what is driving that and just managing it as we always do in a just-in-time basis, adding capacity just in time as we need it. Yun Pak - BMO Capital Markets: Are you guys investing less in media heads or drive assembly equipment and testing?

Again, I mean, it’s right across the entire business. Yun Pak - BMO Capital Markets: Okay. Thank you.

Christian Schwab, your line is open. Please state your company name. Christian Schwab - Craig-Hallum Capital: My quick question was regarding finished goods inventory. It kind of appears that the industry is in a similar situation we were in in 2004. Thankfully we only have one guy with a very bloated inventory; we don’t have Maxtor with it as well. But it appears if one wanted to be an optimist, that both you and Seagate’s management may realize that given the significant decline in earnings on a sequential basis you are predicting, Seagate down 40% and yourselves down 35%, do you believe that that ultimately you hope is a conservative rock bottom number, or are you fearful that the environment is a lot worse than that, if you can recall that a few years ago?

Rock bottom number -- I don’t know how to answer that one because I really can’t predict but from an inventory viewpoint, manufacturers inventory, we were at seven days at the end of Q2. We are at eight days at the end of Q3, and the rest of the industry was at 10 days at the end of Q2 and was at 15 days at the end of Q3. Addressing your 40% down quarter on quarter, I think that that’s a bit -- it doesn’t take into account the actual increase that we’ve seen versus this quarter last year, which is 500 basis points. And as well as that, the seasonality, which is generally from Q3 to Q4, has been down. And last year our EPS was $0.38, so we are forecasting between $0.77 and $0.83. If you don’t think that’s a good increase, I don’t know how I can help you. Christian Schwab - Craig-Hallum Capital: Do you guys still calculate distribution inventory on a 13-week rolling average versus Seagate at a four-week rolling average?

We never did it on a 13-week rolling average. Seagate has done it at a 13-week rolling average previously, but this quarter I think that they actually changed that metric. Christian Schwab - Craig-Hallum Capital: Great. Thank you.

Our final question comes from Scott Craig. Scott Craig - Banc of America: Just two quick questions here; first on the DVR side, is there more opportunity to improve the profitability there and is it necessary to walk away from business and maybe grow slower than the market in order to achieve that, or are there other ways you can achieve it? And then secondly, another question on inventory; from an inventory perspective, I guess the one thing that some people are concerned about is everyone in the industry is pointing to sort of normal channel inventory levels, normal levels in general and yet we saw a pretty sharp drop-off in demand in the last part of March. So how do you guys triangulate being “normal” inventory levels when demand seems to be falling off a bit here? One would think that the whole industry should take actions like you guys did and close shop for a week or two and really bring inventory levels down, but it doesn’t seem to be occurring widespread. So I’m just curious on your thoughts there. Thanks. John F. Coyne: Let me address the DVR market. I think we’ve made some pretty good progress in our, in the actions that we took last quarter to manage that market and that opportunity and those -- that’s managing product mix, customer mix, and cost. And we are working all of those things and as Tim said in his remarks, I mean, we think this is a very good opportunity area for us to generate profitable growth on a go-forward basis. Inventory, Tim, do you want to address that, or --

I do think that the inventory should be managed according to the demand. And I mean, we do have the tools available with the weekly reporting, which happens. So we would be happy if others decide the same sort of discipline in that particular [inaudible] also. John F. Coyne: But I think to put things in perspective, you referenced the 2004 situation where the level of inventory build was 2X the current build in terms of percentage of inventory relative to industry sales. So I think we have a little overhang. I think it has reflected itself in a little slower distribution start this quarter. We don’t actually from the data see that there was any significant reduction in demand in the back half of March. The data indicates that demand was steady. I think the fact that Western Digital's linearity sales was very good left some of our competitors with a bit of a hill to climb in the back-half of March.

Is there one more question?

Robert Marson, your line is open.

Thanks for the follow-up. Do you guys know where your products are ending up on a geographical basis? And the reason I ask that is because there is this global infrastructure boom going on in BRIC and other parts of the world -- Brazil, Russia, India, China area and the Middle East, Latin America. Is there any way to gauge the final consumption of your products and how that is going to shift with the increased global growth at the expense of U.S. growth in PC consumption? Thank you. John F. Coyne: We get some visibility to that in the distribution channel and retail through our point of sales data. It’s not so clear necessarily in our OEM business where those products finally end up, but what we are seeing in our direct business is a lot of strength in Latin America, in China, in the Eastern European countries, in India. So all of the BRIC economies, we are seeing significant strength there and we believe from talking with customers that that’s -- that the OEMs that we sell to are looking at a similar profile in their businesses.

Thank you.

I would now like to turn the call over to Mr. John Coyne. John F. Coyne: I would just like to recap the highlights of the call. We are very pleased with our sustained progress against our profitable growth objective year to date. We continue to feel good about the robust demand forecasted for the industry over the next several years and we feel good about WD’s opportunity to continue to prosper by providing compelling solutions to our customers. With that, I’d like to thank you all for joining us today and I look forward to updating you on our progress in the future. Thank you.

Thank you. This does conclude today’s conference call. You may disconnect at this time.