Bob Blair - Investor Relations John Coyne - President and CEO Tim Leyden - EVP and CFO

David Bailey - Goldman Sachs Rich Kugele - Needham & Company Mark Moskowitz - JPMC Christian Schwab - Craig-Hallum Capital Group Sherri Scribner - Deutsch Bank Scott Craig - Banc of America Katie Huberty - Morgan Stanley Trey Lam - Integral Capital Partners

Good afternoon and thank you for standing by. Welcome to Western Digital's First Quarter Financial Results for Fiscal Year 2009. Presently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions]. As a reminder this call is being recorded. Now, I will turn the call over to Mr. Bob Blair, you may begin.

Thank you. I would like to mention, as we begin that we will be making forward-looking statements on our comments and in response to your questions concerning our business model, our ongoing research and development investments, our potential extension and for the gaming market, demand in the hard drive industry for the December quarter, cost improvements from our media operations, fiscal 2009 capital expenditures, use of our cash, seasonality of the hard drive industry and our financial outlook for the December quarter, including our revenue, gross margin, operating expenses, net interest expense, tax rate, share count and earnings per share expectations. 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-K filed with the SEC on August 20, 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 that we make today are still valid. I also want to note that copies of the remarks from today’s call will be available on the Investor Relations section of Western Digital's website immediately following the conclusion of this call. I would like to turn the call over to President and CEO, John Coyne.

Thank you, Bob. Good afternoon and thank you for joining us today. I am pleased to report that WD again delivered solid, profitable growth in the first quarter, in an environment of subdued demand. Looking at the WD served markets for 2.5-inch and 3.5-inch ATA hard drives in the September quarter, and including the Seagate's 14th week. The market grew 15%, both year-on-year and sequentially. However, we believe that a comparison based on 13 weeks is more useful, in trying to understand the impact of current macroeconomic conditions on seasonal market demand. On a 13 week basis, our served markets grew by 10%, both sequentially and year-over-year to 131 million units. While this is substantially below the average 20% year-on-year growth rate of the last three years, it is worth noting that HDD storage remains one of the few markets overall, that is demonstrating significant year-over-year growth in the face of current macroeconomic conditions. The 2.5-inch market continues to grow strongly, up 37% year-on-year, and 22% sequentially to 61 million units. The 3.5-inch market contracted by 7% year-on-year, but grew 2% sequentially to 69 million units. In this environment, WD continued to out-perform the market. Our unit sales for the quarter were up 34% year-on-year and 12% sequentially to 39.4 million units. We grew 2.5-inch shipments by 147% year-on-year and 25% sequentially to 14.6 million units. We grew our 3.5-inch shipments 6%, both year-on-year and sequentially to $24.8 million. WD's hard drive revenue was up 22% year-on-year and 7% sequentially at $2.1 billion. By presenting customers with a compelling product set, being selective in product market mix, being responsive in availability, and by maintaining focus on quality, efficiency, cost and execution, we again grew profitably in Q1, demonstrating the strength of the WD model and the WD team's discipline and execution. In challenging conditions, we delivered gross margins in excess of 20%, an increase of 180 basis points year-on-year, controlled, operating expense to 9% of revenue, and generated earnings per share of $0.93. Continued close attention to working capital management produced inventory turns of 14, and generated an ending cash balance of $1.2 billion. Finished goods inventory was maintained flat as a percent of sales, both year-on-year and sequentially; while we controlled inventory in the component distribution channel in the low end of the normal four to six week range. We continue to realize returns on our ongoing targeted R&D investments, with several important new technology and new product shipments in the first quarter including, the second generation WD Caviar Green hard drives, which significantly improved power, efficiency and performance. The WD ShareSpace high-speed network storage system that provides cost-effective centralized storage of up to 4 terabytes for small office and home networks, and expanded Enterprise product line with the addition of high-capacity, high-performance, WD RE3 750 gigabyte and one terabyte 3.5-inch SATA hard drives. The new 2.5-inch and 3.5-inch backplane-compatible WD VelociRapto hard drives; the latest additions to the companies 10,000 RPM SATA drive series. The WD Scorpio Blue 2.5-inch notebook hard drive family, with capacities up to 500 gigabytes and 250 gigabytes per platter; extending our leadership position and delivering the industry's most advanced aerial density products in mass production today. Off the same platform, we also introduced the 500 gigabyte My Passport portable USB drives for easy storage and portability of music, videos, photos and data files. Our strategic initiative to focus on the 2.5-inch business is enabling us to participate strongly in this; the fastest growing market segment for hard drives. These range from high-performance and mainstream notebook PCs, to external storage devices, to the emerging notebook market, an incremental opportunity for hard drives. We continue to assess the appropriate timing to extend our 2.5-inch expertise and value proposition to the gaming market. Now, let me briefly address our view of the hard drive industry in the context of the current macroeconomic environment. The deterioration in the economy has led to a slowdown in both business and consumer spending. Most noticeably in big ticket items such as housing and automobiles, but to a lesser degree as we look at products with significantly lower price points. We have seen dampening of demand in the September quarter, and expect conditions of subdued demand to continue into the fourth quarter, the industry's traditionally strongest season. At this point in the quarter we have limited visibility, as customers are unwilling to commit to the usual demand profile early in the quarter, as they focus on reducing inventories and preserving cash in light of broad concerns on both demand and credit availability. Having said this, the WD business model is very adaptable, due to our focus on high-velocity and low cost. We watch demand very closely in each of our markets and adapt accordingly. When we see pockets of weakness, we have the ability to shift focus and adjust, build plans and mix quickly. We continue to plan strategically for the long-term and optimize tactically in response to short-term conditions. Accordingly, we have already lowered our build plans to meet an adjusted demand profile for the December quarter, to ensure that we don't build unnecessary inventory, as we enter the seasonally slower first half of calendar 2009. If demand exceeds our expectations in the weeks ahead, we will chase that volume and do our best to meet customer requirements. Thus far in the quarter, the overall industry build seems well aligned with demand. Tim Leyden will now provide our detailed report on the September quarter and review our outlook for the second fiscal quarter. Tim?

Thank you, John. The WD team once again delivered strong results in the September quarter, as we continue to pay attention to the business fundamentals of supply-demand balance, cost management, fixed asset efficiency and conservative cash and working capital management. The macroeconomic conditions during the quarter resulted in a more subdued growth up-tick in September from what we have seen in previous years. Revenue for our first fiscal quarter was $2.1 billion, up 19% from the prior year; hard drive revenue was up 22% from the prior year and 7% sequentially, and hard drive shipments totaled 39.4 million units, up 34% from the prior year and 12% sequentially. Average hard drives selling price was approximately $53, down $3 from the June quarter and $6 from the year ago quarter. Our Q1 ASP reflects the ready availability of comparable products from most competitors across the entire product range, compounded by the continuing competitive pricing environment. We shipped 14.6 million 2.5-inch drives in the September quarter, as compared to 11.7 million in the June quarter, and 5.9 million in the year ago quarter. These increases were driven by continued strength in notebook PC and external storage demand. In consumer electronics, we shipped 3.9 million 3.5-inch drives for use in digital video recorders in the September (inaudible), 4.1 million in the June quarter, and 3.7 million in the year ago quarter. Sequentially, desktop showed sustained growth, branded revenues were essentially flat, and sales of our enterprise products were inline with our expectation. Hard drive channel revenue was 56% OEM, 26 % distribution, and 18% branded products in the September quarter, compared with 57%, 24% and 19% in the June quarter, and 50%, 31% and 19% in the year ago quarter respectively. There was one customer namely Dell, that comprised more than 10% of total revenue. The Q4 geographic breakdown of our hard drive revenue is 22% Americas, 29% Europe, and 48% Asia. As compared to 29%, 25% and 46% in the June quarter, and 34%, 33%, and 33% in the year ago quarter. Our continuing strength in Asia is driven by our increasing 2.5-inch shipment. And though this is the region where the product is requested and integrated by our customers, many of these drives are incorporated in computer products that are marketed and sold in other regions. Our gross margin percentage for the quarter was 20.1% versus 21.3% in the June quarter, and 18% in the year ago quarter. This gross margin was achieved, despite the competitive pricing, through excellent team execution of improvements in cost, resource utilization and product mix, together with increased volume. Our media operation continues to perform in line with our expectation, and we are on track to achieve the 300 basis points cost improvement that we anticipated by the end of the December quarter. Operating expenses totaled $190 million or 9% of revenue, up slightly from the June quarter. As a result of increased R&D spending. As compared to the prior year, R&D expenses are higher due to the integration media operation and the addition of in-house hard disk controller and software development activities, as well as expansion of our new product and technology capabilities. SG&A increases reflect investments in our sales and marketing infrastructure, in support of our expanding product line and customer base. Prior year's operating expenses included $49 million of in-process R&D related to the acquisition of Komag. Operating income was $234 million or 11.1% of revenue. Interest and other non-operating expenses were approximately $4 million. This includes about $3 million of unrealized losses on our previously disclosed investments and option rate securities. These investments totaled $25 million at the end of the quarter. Tax expense for the September quarter was $19 million or approximately 8% of income before taxes. For fiscal 2009, we expect our book effective tax rate to range between 7% and 10%, as we take into account our expected continuing profitability and the global mix of income by geographic location. Fiscal 2009's cash tax rate is expected to be between 1% and 2%. Our net income totaled $211 million or $0.93 per share. Turning to the balance sheet; our cash and cash equivalents at the end of the quarter totaled $1.2 billion, as compared to $1.1 billion at the end of June. We generated $301 million in cash flow from operations during the September quarter. Capital expenditures for the September quarter were $162 million, and our non-cash charges for depreciation and amortization expense totaled $117 million. We now expect fiscal 2009 capital expenditures to be about $750 million, including about $150 million for our ongoing 8-inch wafer fab conversion. This is down from the 800 million that we anticipated in our July call, as we take into account the uncertain demand environment. Depreciation and amortization for fiscal 2009 is expected to be about $475 million. We have repurchased 1.2 million shares of stock at a total cost of $35.6 million during the September quarter. Since May 2004, we have repurchased 17.8 million shares at a total cost of $284 million, for an average price of about $16 per share. A total of $466 million remains under our existing stock repurchase authorization. We believe that in times of economic uncertainty and tightness of credit, a robust cash balance is an important strength. Going forward, and against this background of prevailing market and credit conditions, we will be selective with our cash usage, as we weigh opportunities between growth of the current business, new market entries, strategic investments, share repurchases, and prepayments of the outstanding debt. As of the end of September, we had 47 days of receivables outstanding, 26 days of inventory of 14 times and 66 days of payables. This resulted in the cash conversion cycle up seven days. Before I address Q2 earnings guidance, I want to once again remind you that WD will have a 14 week quarter in this fiscal year, and we will include that extra week in our fourth fiscal quarter that will end on July 3rd, 2009. Now I will discuss our expectations for the second quarter of our fiscal year 2009. First let me outline the market situation as we see it. Historically, the December quarter's sequential unit growth has been in the range of 6% to 9%. However, in light of the current uncertain macroeconomic environment, the tightening of credit worldwide, and the impact of Seagate's 14 week September quarter on current quarter demand, we are modeling on all modest expectations of market demand growth of approximately 5% for the December quarter. We also expect that average setting price on an absolute basis, will show some degradation contrary to historical trends. In addition, you should also note, that for year-on-year competitive purposes, our fiscal Q2 revenue numbers last year included approximately $120 million of revenue for external media sales, as we fulfilled Komag’s pre-acquisition contractual obligation. While we have continued our leadership in 2.5-inch hard drives, with the September launch of our 500 gigabyte WD Caviar Blue hard drives and My Passport mobile stores solution, most HDD competitors are in a position to provide other mainstream capacities across the entire 2.5-inch and 3.5-inch product lines in this quarter. Taking these factors into account, we expect current quarter revenue for WD to be essentially flat quarter-to-quarter. Consequently, we are forecasting total revenues for the current quarter to be between $2.025 billion to $2.15 billion. We are [maddening] gross margins 19.3%. Operating expenses are projected to be approximately $190 million. Our net interest expense is projected to be about $6 million. We anticipate our tax rate to be 7% of pre-tax income and our share count to be approximately flat with the September quarter. Accordingly, we estimate earnings per share of between $0.80 to $0.90 for the December quarter. Operator, we are now ready to open the call for questions.

Ladies and gentlemen, we will now begin the question-and-answer portion of today's call. (Operator Instructions). One moment please for the first question. Our first question comes from David Bailey with Goldman Sachs. Your line is open. David Bailey - Goldman Sachs: Thank you very much. Could you let us know which segments are the biggest drop in build plan versus your prior expectations for the December quarter?

David, I think we continue to project pretty robust demand for the 2.5-inch segment, and somewhat more subdued demand profile in the 3.5-inch areas. David Bailey - Goldman Sachs: And then for the December quarter, actually on the CapEx side. Can you talk about your priorities for CapEx this year and whether you expect it to be more front-end and back-end loaded?

Our focus as far CapEx is concerned is to focus on flexibility, so that we can build what we need to build as close as possible to demand requirement. And we believe that that's a better choice rather than building inventory linearly in advance. David Bailey - Goldman Sachs: Thank you.

Rich Kugele with Needham & Company. Your line is open. Rich Kugele - Needham & Company: Thank you. Good afternoon. First, when you look at your branded share relative to what the market's doing, can you comment on what you think the branded may do here in the December quarter and how you are positioning yourself for that?

Sure. We had a very good last quarter from a share and volume perspective. We grew significantly. We did grow rapidly in our 2.5-inch segment which accounts for the flat quarter-over-quarter revenue, which reflects the lower ASPs of 2.5-inch in general in that environment. As we look forward into the coming quarter, we continue to see good traction in the external storage market. As I've said many times on these calls, we see this as one the under-appreciated areas for total storage demands, and so far it's exhibiting good strength in current macro environment. Rich Kugele - Needham & Company: Then when you were talking about inventories being closely managed, were you referring to this space or was it broader than that to OEMs?

We are managing, but we've managed every piece of inventory, whether it's raw material, work in process or own finished goods, the level in the channel whether component or retail. We manage it all. Rich Kugele - Needham & Company: Okay. Secondly, on the overall plans, because you are now number one in notebook shares, I believe you are number one in retail as well. Where do you see, given the current environment, WD's greatest opportunities for growth over the next 12 months?

Well I think, being number one in the two fastest growth market segment within the total industry is very good positioning, and continuing to rollout leadership products in those spaces, which we absolutely intend to do, and we currently have a very good position. I feel very good about that. As we look at the rest of the current product portfolio, the fundamentals of the quality and availability and the high value low-cost capability that will give us strength in continuing to address those existing markets for which we have product lines. We then have opportunity in unserved markets today; the traditional enterprise market which we’ve indicated that we are well along the process of investing in the underlying technologies and product portfolio to address that market in the future. We look at opportunity, as I mentioned in my remarks, we’re looking at the opportunity in the gaming market given our industry leading cost position. We see it as a competitive but attractive market space. And likewise, in the netbook market as it unfolds is clearly demonstrating a preference for the incorporating of hard drives into those systems. Probably when the dust settles through the December quarter, we’re probably going to be somewhere in the 70% to 80% netbook being shift with hard drives. And we see that also, as an attractive incremental market to our core markets. Rich Kugele - Needham & Company: Okay. Lastly, on the overall market. Do you think that the December quarter is the crossover point for when notebook HDDs are shipped more than desktop 3.5-inch, or do you think there is still enough branded consumption of 3.5-inch to last for a little bit?

It will be in the current fiscal year in my view. Whether it’s by the end of December, who knows? We don't much care; our fundamental investments in technology address all markets, our investments in manufacturing infrastructure and operations and supply base also are highly leveraged in terms of their ability to be used for either form factor. So, we are very comfortable about being able to respond to whatever rate of change there is as those volumes cross over. Rich Kugele - Needham & Company: Thank you very much and well done.

Thanks.

Mark Moskowitz with JPMC. Your line is open. Mark Moskowitz - JPMC: Yes. Thank you. Good Afternoon. Two questions please. The first, can you just help us out. It's kind of a loaded question, but I am just trying to reconcile your comments relative to your peer's comments yesterday. When they said they stepped into the fog that they are concerned about the macro, but yet October is kind of seen or exhibiting its usual buzz, where as you are saying you have already seen subdued demand and weakness. Can you kind of just help us understand the puts and takes behind that?

Sure. In September, we saw demand not stepping up to meet the same level of seasonal up-tick that was typical of a September in a Q1. And that's probably the first large manifestation of the impact of the current macroeconomic environment. We see that carrying over to a degree into October, and our expectations for outbound products, that people are managing their inventories more closely right throughout the chain. People are recognizing that in these kind of environments cash is king, and utilizing their cash and their credit lines to support velocity rather than to support inventory is the right use of their resources. Therefore, we are seeing lead times shortening, leaving the decision making on what to buy and when to buy it until they were looking at the demand side of that equation. The numbers are still good; you've have seen our guidance, we are looking at flat revenues which implies volume increase. I think, Tim you said 5% on a sequential basis. We are still expecting market growth, one of the few markets to exhibit growth in these times. So I don't think we are inconsistent at all with what Seagate would have said. Mark Moskowitz - JPMC: Okay, thank you. Secondly, they believe they have done a great job in terms of reflecting the operating model consistently with respect to the operating metrics. I want to get a sense of how flexible you are if we do see a really subdued demand environment over the next couple of quarters. Clearly, some of the external suppliers out there are going some difficulties. Would you be more apt to leverage TDK in terms of them being stuck in a position and to try to volume, or maybe you would source your head's more externally if you get some good price breaks there?

I think the answer is more about how we closely manage inventories, and that’s not just in our own shop and in finished goods. That’s also looks backwards into the supply chains and the signal for getting in to the supply chain and the level which we are getting them dressed up to go to the party. Therefore, we manage that entire supply chain footprint, both well and closely. I think our supply chain partners are all pretty much aligned with our plan, and our supply chain, because it’s routinely exercised along that model, tends to respond faster to the environment once they get our signals. As to moving our sourcing model; no, we have a pretty well established, long term, strategic sourcing model that addresses particularly technology partners for the value they bring to us in assurance of execution on the introduction of new products and new aerial density points. That's the value they bring to our party. Our internal manufacturing brings the fundamental low cost value. Mark Moskowitz - JPMC: Thank you.

Christian Schwab with Craig-Hallum Capital Group, your line is open. Christian Schwab - Craig-Hallum Capital Group: Thanks. Our recent checks have suggested that Seagate, which has been very aggressive in pricing the last few quarters, became a little bit more reasonable with pricing towards the end of the September quarter, and so far in the quarter has continued to be a little bit more reasonable than they say they were, 10, 12 weeks ago. Would you say that you have seen that as well?

Current price level from the industry, we certainly have seen pretty significant takedowns over the last three quarters on a quarter-by-quarter basis. There is the question of how long our competitors can continue to make such poor returns on their investments, by limiting those returns through very aggressive pricing. I don't know the answer to that question. I do know that in the environment over the last three quarters and the environment we anticipate for the current quarter, Western Digital continues to deliver the kind of industry leading results that we have demonstrated today. Christian Schwab - Craig-Hallum Capital Group: Fabulous. Could you give us any thoughts on all the rumors regarding consolidation in the industry and what your thoughts are?

Well, you know our long-standing policy is not to comment on such rumors. The history of the industry suggest that in times like these, where demand falls below the traditional demand curve for a period of time that pressure is put on the weaker participants and this tends to result in consolidation. Again, we don't believe that consolidation is necessary. We make a very nice living in the business with the business model we've developed, but it could be beneficial. Christian Schwab - Craig-Hallum Capital Group: One last question. Just on the component side, and running very lean inventories I think in your prepared comments you said that you were running raw materials and components at very lean at four weeks versus six weeks. Did I hear that correctly?

Not quite. Christian Schwab - Craig-Hallum Capital Group: Okay.

The commentary I made on inventory was that our finished goods inventory is flat both sequentially and year-over-year as a percent of sales, our channel inventories of the component distribution channel is in the low end of our four to six week range. But if you take Tim’s commentary on overall inventory at 14 turns, we consistently carry the lowest inventory in the industry at the highest velocity, and therefore have the highest ability to respond to change and opportunity. Christian Schwab - Craig-Hallum Capital Group: Thank you.

Sherri Scribner with Deutsch Bank. Your line is open. Sherri Scribner - Deutsch Bank: Hi, thank you. About the ASP decline this quarter. Could you maybe give a little bit of detail on where pricing was most aggressive? Was it again 2.5 inch which we've seen for a while or did you see pricing get more aggressive in 3.5-inch? And as part of that in the December quarter, you mentioned that you would expect to see some degradation in ASPs. Would you expect similar levels down to 5% to 6% which we saw this quarter, and Seagate sort of suggested we see similar, but some color on that would also be helpful?

We saw competitive pricing right across the board. For the 3.5's a little more than 2.5's, and we anticipate that in the December quarter, because all competitors at this stage pretty much have ready availability almost right across the product lineup. We expect that it will be competitive and again at the high-end of what we would normally see or above the high-end of what we would normally see in a December quarter. Sherri Scribner - Deutsch Bank: Are you seeing a negative mix in your product profile in terms of drives that are addressing the network market, are you seeing a shift down? Also how is demand for high capacity drives right now?

Demand for high capacity is good. Certainly the network is kind of by definition a low capacity player, a lower (inaudible) context. The range of low capacities is from 80 to 160 gigabytes. And so, we are seeing a pretty good mix across the entire business. As we've continued to grow the business, we’ve been mixing down, because of our initial strength in the very high capacities when we had them and nobody else could produce them. So, as the other folks have come to the table, with the 250 gig capacity points and then the 320 gig capacity points, our overall mix has become more reflective of the total market demand. Again, we anticipate that will richen up a little bit here as we go into the December quarter shifting the 500 gigabyte. Sherri Scribner - Deutsch Bank: Thank you very much.

(Operator Instructions). Scott Craig with Bank of America, your line is open. Scott Craig - Bank of America: Thanks, good afternoon. With regards to the gross margin guidance for the December quarter, can you give us the pushes and pulls on it, on a quarter-over-quarter basis. How you see that playing out? And then secondly, in the 2.5-inch notebook space, do you still feel that there are opportunities on a sequential basis over the next couple of quarters to gain share, or do you think you will be ceding share there as some of the other players have some more competitive products coming out in that space?

Okay. As far as the December, gross margin, the December quarter gross margin is concerned, and I think the big push will be on supply demand balance. Consequently, I think there is enough supply out there. People have comparable products across the range. So, we expect that there will be pretty competitive pricing. We will combat that through cost and efficiency and utilization, and by being selective in how we approach the different pockets of weakness and pockets of strength. And so, we think it will be pretty much as it has been in the past. Scott Craig - Bank of America: I think in your 2.5-inch question, the position there we believe share is a result of customer activity and how the customer perceive the value that we are offering.

To date, our customers have been demonstrating that they are very happy with the value proposition that Western Digital brings, whether it be in high capacity drives, whether it be in availability on demand, superior quality, in our ability to continually reinvest in future technologies, future product breadth, significant high performance capacity and the development of the ongoing supply chain. These are all things that our customers look at in making the decision of where they place their business. Price is one element. But we believe we have a very strong portfolio, right across the board, but a particularly strong portfolio in the 2.5-inch environment where we have been very focused over the last five years in building our current position. So, we would wait till the customers demonstrate the appeal of the value propositions. Scott Craig - Bank of America: Okay. Thank you.

Thank you, Katie Huberty with Morgan Stanley. Your line is open. Katie Huberty - Morgan Stanley: Yes. Thank you. Can you help us reconcile the five point difference between your forecast of the market growth rate in the third quarter versus Seagate's. Because it doesn't seem like one week would make that big of a difference.

That's a difference in growth rate. Katie Huberty - Morgan Stanley: Right.

If you run the numbers in our served market, which is 2.5-inch and 3.5-inch ATA drives, the 14 week number was 136 million, the 13 week number was 131 million off a base of a 119. Katie Huberty - Morgan Stanley: Okay, got it. You think that anybody over shipped late in the quarter? The difference is just the one week?

Yes, I think the 13 week quarter profile was very traditional, very seasonal. Katie Huberty - Morgan Stanley: Yes.

But a little softer right the way through September, right, than traditional, but still a similar shape. Katie Huberty - Morgan Stanley: Okay. Thanks.

Trey Lam with Integral Capital Partners. Your line is open. Trey Lam - Integral Capital Partners: Hi. First question has to do with Circuit City. Do you think that will have an impact on your December quarter, given the problems at Circuit City? And the second question I have is, have you seen an impact given your competitor sort of refresh their branded external products. Have you seen that impact My Passport and My Book biz.

Okay. As far as commenting on the customer you called out. We don't comment on specific customers. Trey Lam - Integral Capital Partners: Will that have any impact on your business?

Well, theoretically, I mean when demand is demand and customers want the product, they will buy it wherever they can buy it. So it doesn’t really matter whether there are specific customers out there giving the products. There's demand for all product on an overall basis, so customer will demand that product wherever. Trey Lam - Integral Capital Partners: Okay.

And as far as the competition impact on brand is concerned, we've a very competitive lineup. We actually think it’s a very competitive space, and we believe that our product line up is broad and is capable of continuing to be deeply demanded by the customer. Trey Lam - Integral Capital Partners: Okay. So really no impact so far yet?

That's correct. Not that we've seen. Trey Lam - Integral Capital Partners: Okay, great. Thank you.

Rich Kugele with Needham & Company, your line is open. Rich Kugele - Needham & Company: Thanks. A couple of follow-up questions: On the CapEx side in particular, of the $600 million that’s not related to the wafer fab, is there any way we can break that down to understand better where the spending is going? For example, are you assuming some level of market growth that you need to have capacity for in that or is that, what is maintenance CapEx now. Any granularity on what the 600 actually should be looked at as?

Yeah, we’ve been pretty specific about what our CapEx model is. It’s in the 7% of revenue region, and we are continuing to execute our business. We add capital on a just-in-time basis, and we take advantage of efficiencies when we see that there isn't a need to add further capital. We continue as we have done for many years. We continue to take those efficiencies and cut our capital, as we see that there isn't a need for it. So I think we are being conservative relative to the future, but it's more or less at this stage, its business as usual. Although we are, as I said, paying attention to being flexible with capital and the build more towards the customer needs. Rich Kugele - Needham & Company: Okay, then lastly on growth into '09. Obviously not to give points of guidance or something, but 5% growth even if the market does do that is materially below any type of normal seasonality. Does that change the dynamics for the March quarter as well in your mind? I mean do you think the usual approach of down and down again maybe is different or how should we be thinking about modeling this?

Well, at this stage we are operating with limited visibility, and we will have to see what happens in the balance of the December quarter, and then we will have to see what happens with inventory bills, and we'll have to see what Christmas is like. And I don't think that there is any great visibility out there or anybody has any great visibility out there. What we are seeing as John mentioned is, that people are being cautious about showing their hand relative to their demand profile, and they are not giving us thorough forecasts as what they used to. Rich Kugele - Needham & Company: Okay, thank you very much.

Okay I think we have no more questions. In closing, I want to thank the WD team, our employees, our supply partners for delivering another excellent quarter. We remain very encouraged by the long-term market opportunities for profitable Western Digital growth in the years ahead, and are confident in our ability to continue to make the WD business model work effectively in all market environments. I'd like to thank you for joining us today, and I look forward to keeping you informed about our progress.

Thank you. This does concludes today's conference you may disconnect at this time.