Wolfgang U. Nickl - Chief Financial Officer and Senior Vice President Timothy M. Leyden - Chief Operating Officer John F. Coyne - Chief Executive Officer, President, Executive Director and Chairman of Executive Committee Bob Blair -

Keith F. Bachman - BMO Capital Markets U.S. Benjamin A. Reitzes - Barclays Capital, Research Division Richard Kugele - Needham & Company, LLC, Research Division Kevin M. Hunt - Auriga USA LLC, Research Division Katy Huberty - Morgan Stanley, Research Division Mark A Moskowitz - JP Morgan Chase & Co, Research Division Joe Yoo - Citigroup Inc, Research Division Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division Sherri Scribner - Deutsche Bank AG, Research Division Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division Bill C. Shope - Goldman Sachs Group Inc., Research Division Unknown Analyst -

Good afternoon, and thank you for standing by. Welcome to Western Digital's First Quarter Financial Results for Fiscal Year 2012. [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. To begin, I want to mention that we will be making forward-looking statements in our comments and in response to your questions concerning industry demand in the December quarter and the industry's ability to meet that demand. The impact for the flooding in Thailand on the industry and on our business on the December quarter and beyond, including our HDD capacity, our planned operations, recovery efforts and the costs and expenses incurred in connection with these efforts, and our ability to complete these recovery efforts. The expected completion and the timing of our planned acquisition of Hitachi GST, growth opportunities in the industry, our product offerings in the near-line enterprise market, OEM inventory levels and our financial results expectations for the December quarter, including revenue, gross margin, expenses, tax rate share count and loss per share. 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 12, 2011. 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. In addition, references will be made during this call to non-GAAP financial measures. Reconciliations of the differences between historical GAAP measures we provide during this call to the comparable GAAP financial measures that are included in the Investor information summary posted in the Investor Relations section of our website at westerndigital.com. The forward-looking guidance we provide during this call excludes acquisition-related expenses that we expect to incur in connection with and following the planned acquisition of Hitachi GST, and unusual charges and expenses related to the flooding in Thailand. Because these acquisition-related and unusual expense items are not known to us at this time, we are unable to provide guidance for or a reconciliation to the most directly comparable GAAP financial measures. The impact of these excluded items may cause the estimated non-GAAP financial measures to differ materially from the comparable GAAP financial measures. As a reminder, until our acquisition of HGST closes, WD and HGST remain independent companies, so we will not be taking any questions about HGST's business or financial performance. We ask that analysts limit their comments to a single question and one follow-up question. I also want to note that copies of remarks from today's call will be available on the Investors section of WD's website immediately following the conclusion of this call. I would now like to turn the call over to President and Chief Executive Officer, John Coyne. John F. Coyne: Thank you, Bob. Good afternoon and thank you for joining us. With me are COO, Tim Leyden; and CFO, Wolfgang Nickl. As you can imagine, the WD team has been consumed recently in dealing with the relentless flooding in Thailand and its significant impact on our employees, their families and our suppliers, as well as on the business infrastructure in the region. We are grateful that the WD employees in Thailand are safe at this time, although many of their lives and homes have been disrupted and damaged. This is a disaster of unprecedented scale, with over 317 fatalities so far reported, over 9 million people affected, 700,000 homes and 14,000 factories flooded and over 660,000 workers out of work. The overall impact to the people of Thailand is immeasurable and our hearts go out to them in these trying times. Having addressed the safety of our people and put in place programs to continue supporting them in this crisis, we have now turned our focus and energies to maximizing our capability to meet our customers' needs in the near term and to return our operations to normal as soon as possible. Full recovery will be a multi-quarter challenge. We believe the unconstrained HDD demand for the December quarter is flat to slightly down from September quarter ship levels. Having said that, due to the concentration of HDD supply chain factories in various industrial parks in the flooded area, it is apparent that the HDD industry will be constrained in meeting that demand. Since WD has greater direct manufacturing exposure to the flooded areas, we believe the impact on our business in the short term will be greater than to other HDD manufacturers. In their remarks, Tim will provide a summary of how we're dealing with a operations challenges presented by the flooding and Wolfgang will provide a current quarter outlook. Turning back to the September quarter, it materialized very much along the lines we expected. Industry shipments came in at 176 million units, just above the high-end of our estimate entering the quarter. This is a record quarterly shipment level for the hard drive industry, demonstrating the value of hard drives in the overall digital universe, even in an environment of broad-based, low growth and global economic uncertainty. While the industry experienced a reasonable back-to-school season contributing to record quarterly shipments, the quarter-over-quarter growth was nevertheless muted by historical standards. We believe this is a reflection of the overall macro uncertainties, the slow growth being experienced in many mature markets and the PC industry's continued shift to a higher usage of sea freight instead of more expensive air freight, which has time shifted typical seasonal linearity. WD's financial results and share growth demonstrate continued strong execution at a time when we have also been highly focused on our planned acquisition of HGST. We continue our work with the regulatory authorities around the world to obtain approval of our planned acquisition of HGST. Our integration planning activities are progressing well. Although we believe the acquisition should be cleared unconditionally, we have submitted a proposed confidential remedy to the European Commission to address issues raised in the course of its review. We now expect the European Commission to issue its decision on the transaction by November 30. We anticipate the other agencies reviewing our transaction will make their final determination within a similar timeframe. Therefore, we are maintaining our target for closing the HGST acquisition by the end of the calendar year. Our analysis of the tremendous underlying long-term need for cost-effective mass storage in both developed and developing regions of the world underpins our continued enthusiasm for this business. We believe our model of providing high-quality product with speed, flexibility and low cost structure is a path to long-term success and shareholder value creation in this dynamic market. While the flooding in Thailand presents us with a series of daunting challenges during the next several quarters, I'm highly confident in the abilities of the dedicated WD team with its strong execution skills to complete our operations recovery effectively and efficiency. This is a short-term challenge in what we continue to believe is a great long-term opportunity for continued profitable growth at WD. Before turning the call over to Tim for his operations review, I want to pay tribute to the WD team for their heroic efforts in dealing with this adversity. A company leader could not ask for a greater effort and commitment than we have seen from this team. Tim? Timothy M. Leyden: Thank you, John. Firstly, I would cover our fiscal Q1 performance and then give a status update on the impact of the Thailand flooding on our business. WD shipped 57.8 million units in the September quarter, up 7.4% sequentially and 14% from the year-ago period. As we stayed focused on executing well in our core businesses, where our value proposition continues to resonate with our customer base. Higher volumes, favorable mix, pass through to customers of a portion of our rare earth material cost increases and minimal price declines delivered revenue growth of 12.1% quarter-on-quarter and 12.4% year-on-year. Gross margins improved by 60 basis points to 20.1%. Price declines for the quarter were at a minimal level and were less than the seasonal norm. Product mix was favorable. Effective cost management and improved utilization enabled us to come in at the upper end of our implied gross margin guidance. Revenues totaled $2.7 billion, net income was $239 million and cash flow from operations declined sequentially from $447 million to $352 million, as we invested funds and working capital to establish a solid entry foundation for the December quarter. Now turning to market segment performance. In the compute space, industry shipments increased to $119 million from $118 million in the June quarter and were up from $115 million in the year-ago quarter. WD shipped 41.2 million units into the compute space in the September quarter compared to 39.2 million units in the June quarter and 37.5 million units in the year-ago quarter. And we grew market share by approximately 30 basis points sequentially and 190 basis points year-on-year. Consumer activity was stronger, although this seasonal uplift was more muted than we have seen historically than is typical of fiscal Q1. The near-line enterprise market was up sequentially from 6.4 million to 6.8 million units and up from 5.8 million units year-on-year. This market continues to benefit from the momentum of cloud computing. The traditional enterprise market at 7.9 million units was down from 8.3 million units in the June quarter, and was up year-on-year from 7.2 million units. WD shipped 2.4 million units into the combined enterprise markets in the September quarter, down from approximately 2.5 million in the June quarter and up from 2.3 million units in the year-ago quarter. We remain on plan to bring our third-generation, 2.5-inch SAS product to market within the calendar year. HDD manufacturer shipments in the Branded Product segment came in at 14.4 million units, up from 12 million units in the June quarter and up from 11.6 million units in the year-ago quarter as a sequential demand increase followed typical seasonal patterns. Year-on-year unit growth in this segment was a strong at 24.1%. WD shipped 7.1 million units into this market in the September quarter, up from 5.7 million units in both the June and year-ago quarters. WD's strong brand equity and broad product line enabled us to recover some of the market share position that we had lost due to supply constraints in the aftermath of the Japanese earthquake. In the DVR market segment, shipments were an estimated 14.1 million units, down sequentially from 14.4 million units in the June quarter and up from 13.2 million in the year-ago quarter. WD shipped 7.2 million units into this market in the September quarter, up from 6.5 million in the June quarter and up from 5.2 million in the year-ago quarter. Our performance in this segment reflects strong customer preference for WD's appealing product lineup. The remaining balance of the industry shipments is represented by gaming, automotive and 1.8-inch drives. Inventories in the HDD supply chain exiting the quarter were below historical run rate levels in each segment. Now turning to the December quarter. We believe that the unconstrained HDD demand TAM will be around 170 million units. We also believe that the industry will be supply-constrained due to the flooding in Thailand and the concentration of HDD suppliers and factories in various industrial states in the flooded and flood-threatened areas. I'll now address the specific impact of the flooding on our business. We suspended production in all of our Thailand facilities from the beginning of last week in order to protect our personnel and to move as much equipment as possible to locations less likely to incur water damage. At this point, we are thankful that all our employees are safe. And we moved much of the equipment, which had been situated on the ground floors to higher floors. Despite the heroic efforts of our team, over the past weekend, rising water, which had first penetrated the Bang Pa-in Industrial Park flood defenses, inundated the company's manufacturing facilities there and submerged the remaining equipment on the ground floors. At the other company manufacturing location in Thailand, Navanakorn Industrial Park, the park's flood defenses were breached on Monday morning, local time, and water began to flow into our buildings late on Tuesday night. The flooded buildings in Thailand include our HDD assembly test and slider facilities, where a substantial majority of our slider fabrication capacity resides. In parallel with the intermittent slider shortages resulting from the above disruption, we're also experiencing other shortages on component paths from vendors located in several Thai industrial parks that have already been inundated by the floods or have been affected by protective plant shut downs. We are evaluating the situation on a continuous basis. But in order to get these facilities back up and running, we need the water level to stabilize, after which point, it will take some period of time for the floods to recede. We're assessing our options so that we can safely begin working to accelerate the water removal and either extract and transfer the equipment to clean rooms in another locations or prepare it for operation on-site. As a result of these activities, at this point in time, we estimate that our regular capacity and possibly our suppliers' capacity will be significantly constrained for several quarters. We are working with our suppliers to affect the recovery of their supply chain and to ramp existing capacity in other locations. We are proceeding with all possible haste and ingenuity to address the situation because we are mindful of the impact on our employees, customers, suppliers, shareholders and the communities in which we operate. We are also pursuing all possible options to maximize our Malaysian facility's throughput. I will now turn the call over to Wolfgang Nickl for a review of our Q1 financial performance and our outlook for the second quarter of fiscal 2012. Wolfgang U. Nickl: Thank you, Tim. As a reminder, a summary of historical financial information has been posted to the Investor Relations section of our website. In my remarks, I will first summarize our financial performance for last quarter and then I will provide a range of expected financial results for the December quarter. For the September quarter, revenue was $2.7 billion, up 12% from the prior year ended June quarter. [indiscernible] average selling price was approximately $46 per unit, flat with the year-ago quarter and up $2 from the June quarter. Revenue from sales of our branded products was $489 million, up 15% from the year-ago quarter due to the continued strong customer preference for the WD brand. Branded products revenue was up 28% from the June quarter. There were no customer that comprised 10% or more of our total revenue. Demand in Asia remains strong at 59% of revenue, up from 54% in the prior year and down slightly from 60% in the June quarter. Europe came in at 22% of revenue, down slightly from 23% in the prior year but up from the 20% reported in the June quarter. America with 19% of revenue, was down from both last year's 23% and June's 20%. OEM sales represented 53% of revenue, up from 50% in the prior year. The OEM sales percentage was down slightly from June's 55%. Retail sales as a percent of revenue were 18%, flat to the prior year but seasonally up from June's 16%. Our gross margin for the quarter was 20.1%, up from 18.2% in the year-ago quarter and 19.5% in the June quarter. The quarter-over-quarter increase in gross margin is a function of an improved business segment and product mix. Overall, like-for-like costs increased slightly as higher costs of rare earth materials were not fully offset by savings in other areas. As outlined during our last investor call, we implemented a series of offsetting measures, including significantly increasing our use of ocean shipments before passing along a portion of these cost increases to our customers. Ultimately, this contributed to relatively flat like-for-like pricing between the June and September quarter. While we have achieved the gross margin level that was implied in our guidance, it is important to point out that we are still operating below the mid-point of our target business model. R&D and SG&A spending totaled $282 million from the September quarter as compared to $226 million and $297 million in the year-ago and June quarters, respectively. The September quarter included $18 million for acquisition-related expenses and unrelated litigation accruals, whereas the June quarter included the combined $32 million for these items. Excluding these items, R&D and SG&A would have totaled $264 million or 9.8% of revenue in the September quarter versus $226 million or 9.4% of revenue in the year-ago quarter and $265 million or 11% of revenue in the June quarter. The quarter-over-quarter increase is primarily a function of increased investments in product portfolio expansion and technology development. Net interest and other non-operating expense was $1 million, including $3 million for commitment fees on the credit facility related to the pending acquisition of Hitachi's drive business. Excluding these fees, net interest and other non-operating income would have been $2 million. Net expense for the September quarter was $19 million or 7.4% of pretax income. This includes a $2 million favorable adjustment to tax accruals for settlement of IRS claims related to Komag, the magnetic media company we acquired in September of 2007. Our net income for the September quarter totaled $239 million or $1.01 per share, as compared to $197 million or $0.84 per share for the year-ago quarter and $158 million or $0.67 per share in the June quarter. September quarter included $21 million for acquisition-related operating expenses and bank commitment fees and unrelated litigation accruals, whereas the June quarter included a combined $35 million for these items. Excluding these items, non-GAAP net income for the September quarter totaled $260 million or $1.10 per share as compared to $197 million or $0.84 per share in the year-ago quarter and $193 million or $0.81 per share in the June quarter. Turning to the balance sheet. Our cash conversion cycle for the September quarter was 1 day. This consisted of 46 days of receivables, 27 days of inventory, or 13 terms, and 72 days of payables. We generated a $352 million in cash from operations during the September quarter and our free cash flow totaled $218 million, reflecting strong sales linearity and tight asset management. We made a conscious decision to increase ocean shipments as an offset to the cost increase as we're experiencing for rare earth materials. This is reflected an increase of our finished goods inventory by $58 million. Capital expenditure for the September quarter totaled $134 million. Depreciation and amortization expense for the first quarter totaled $158 million. We made a $31 million debt repayment during the September quarter and thereby, reduced our debt balance to $263 million. We exited fiscal Q1 with cash and cash equivalents of $3.7 billion, an increase of $185 million from the June quarter. Approximately, $3 billion of our ending cash balance was offshore. Let me now provide some context for our guidance for the December quarter. From a market perspective, we believe that starting inventory in the distribution retail channels was very lean and we believe there were no further increases of the inventory levels that our OEM customers hold. We estimate that approximately 40% of all drives in the industry are produced in Thailand, with Western Digital being overweight [ph] at approximately 60%. With respect to our specific situation, there are a number of significant factors that are impacting our guidance and that will influence our financial performance in the December quarter. We've shut down our Thailand factories and are at this point, not in a position to establish when they will recommence operations. Furthermore, some of our key suppliers have ceased production as well and are significantly impacted. We are working diligently with them but at this point in time, we do not yet fully understand the timeline for their full recovery. Both of these conditions will likely continue into the March quarter and possibly beyond. Costs will be impacted negatively by the significant under-absorption of our assets and infrastructure. We also expect to incur additional costs in restoring supply. We will also forego land-ocean savings in favor of airfreight in order to increase immediate availability for our customers. On the OpEx aside, we will continue to invest in growth areas such as our enterprise, SSD and branded product businesses. We will continue to see acquisition-related expenditures during the quarter. We expect to incur unusual charges and expenses related to the impact of the flooding on our operations, including items such as fixed asset impairments, inventory write-downs, charges related to cancellation of purchase order for excess materials, further charges for reclaim and recovery work and foreign currency losses to settle forward exchange contracts that exceed our current requirements. With this in mind, our guidance for the December quarter is as follows: This guidance does not include acquisition-related expenses and the unusual charges and expenses that I just referred to. Further, this guidance reflects our current assessment of the Thailand situation. And as we have said, that situation and our understanding of its impact on our business continues to evolve. We expect hard drive shipments of between 22 million and 26 million units. We expect revenue to be in the range of $1.05 billion to $1.25 billion. R&D and SG&A spending will be approximately $230 million, excluding acquisition-related expenses and unusual charges. We expect tax expense of approximately $10 million. We anticipate our share count to be approximately $234 million. Accordingly, we estimate a non-GAAP loss per share of between $1.10 and $1.50 for the December quarter, which excludes acquisition-related expenses and the unusual charges and expenses related to the flooding in Thailand. Operator, we're now ready to open the call for questions.

[Operator Instructions] Our first question comes from Sherri Scribner with Deutsche Bank. Sherri Scribner - Deutsche Bank AG, Research Division: In terms of understanding what's going on in Thailand, do you have any sense of the impact to the total supply chain? And by asking that, I mean, what do you expect the industry's ability to shift products to be in the December quarter? Timothy M. Leyden: Sherri, this is Tim. As we pointed out in the scripts, it is a very live situation. We are looking at mechanical components of the ones that seem to be the most impacted at this stage when we look at the external components. In our own case, we're impacted internally through the slider fab because the vast majority of our product, of our internal sliders are made in Bang Pa-in at the ground floor, which is now inundated with water. We also process small percentage of WD wafers through a slider fab in the Philippines, which we will be ramping up. And in addition, you'll recall that our long-term model for our finished heads is to purchase 10% to 20% from the merchant market. So what we see is, in our case, the slider fab is the limiting situation. And we see mechanical components and motors significantly impacted. But we are not in a position to be able to provide insight into how that impacts the rest of the industry and it would be merely speculative on our part at this stage. Sherri Scribner - Deutsche Bank AG, Research Division: Okay, that's fair. And then just thinking about your facility in Malaysia, how much extra capacity do you have in Malaysia that you could utilize? And do you have plans to buy equipment to go into Malaysia or to move equipment there? Timothy M. Leyden: We're looking at every possible option in order to improve our capacity. But right now, we're more constrained by material and component availability. But there is plans underway to be able to react and to increase our production in the Malaysian factory and indeed, to extract the equipment from the buildings that are currently inundated and put them in other clean room locations. All of that is -- the planning for that is underway. But as you can imagine, with the infrastructure and the logistical problems that are there, it is not an easy task because the water is still surrounding our facilities. So we'll have to figure out a way to extract the water and/or figure out a way that we can use the water in order to extract equipment. And as well as that we are looking at new -- at purchasing equipment, et cetera in order to make sure that we can react to our customer needs because this is a significant issue for all the constituents involved, the customers, employees, ourselves, the community and shareholders, we understand the seriousness of this.

Rich Kugele with Needham and Co. Richard Kugele - Needham & Company, LLC, Research Division: I know it's a dynamic situation but in terms of the equipment itself, what happens when water touches it? I mean, is it even recoverable? And are all those suppliers still in existence or what actually has to happen from an equipment standpoint if they're not. And then I have a quick follow-up. John F. Coyne: Well, there are people that were able to engage in order to provide an evaluation of similar situations, which we are pursuing. And we did remove, in many cases, we removed the electronics from the heavier equipment and got it up to higher ground. But there's a -- it really is going to depend on an assessment once we get in, have a look and see what sort of impact from the water. And perhaps any other -- monitor whatever else is in there. And we're looking at obviously the equipment manufacturers and the people who would be able to provide equipment. We're looking in the used market and so we're looking at every possible option. Richard Kugele - Needham & Company, LLC, Research Division: Okay. And then just lastly, from an insurance standpoint, can you talk about to what degree you are insured against these losses? Is there just equipment inventory or is it also some level of business continuity insurance? Was it insured despite being related to hit around flood plains and such? John F. Coyne: Yes, we carry flood insurance for both our equipment and inventory and we also have business interruption insurance.

Scott Craig [ph] with BMI-Mellon [ph]. Unknown Analyst -: Tim, I don't want to put words in your mouth, but when you talk about multi-quarters and you kind of looked at what, say ON [ph] Semiconductors said this morning, it sort of looks like this going to take a year for yourselves and the industry to recover. Is that sort of the right timeframe even if you are capable of setting up shop elsewhere or transferring equipment and stuff like that? And then secondly, around the Malaysia facilities, can you provide a little bit more details as to what sort of capacity utilization that facility was running at and how quickly you can transfer stuff over to that facility recognizing that there is some components constraint issues as well? Timothy M. Leyden: Yes, I can't speculate on the length of the period. I mean, the WD team has effectively in times past been able to take facilities from just a shell and bring it up and get it up to high volume in a relatively short period of time, certainly within -- well within the period that you mention. Then as far as the Malaysia is concerned, it is, as you can well imagine also, there does has to be some reconfiguration. We have to make sure that we can run all the different array of products in there, so there has to be some reconfiguration. But again, that is something we have done before, something that the team is very skilled at and we've got a very dedicated team. And they're looking at every possible option in order to get the plant up and running. But as I say, right know, our biggest constraint is components.

Ben Reitzes with Barclays. Benjamin A. Reitzes - Barclays Capital, Research Division: Can we talk about inventory a little bit, John? I'm a little confused. I guess, there's OEM inventory. There's distributor inventory and then there's your inventory, which you have finished goods that you said was a lot of rare earths. Can you just kind of talk about what kind of buffer, if there is any, in the industries out there from a distributor and OEM level? How many weeks can the industry and yourselves operate and based on what you see out there. And then I have a follow-up. John F. Coyne: Sure. We think the distribution inventory exiting last quarter was in the 4-week range. We believe that the OEM jet hub inventories will be at about the 2-week range. And then our own inventories, the majority of which was on boats at quarter end, I think probably about 1 week. Our competitors, as you know, tend to run a little heavier on inventory than we do. So from an -- I would think that the distribution comment, industry level and WD levels, are equivalent. I think in the OEM jet situation, you're probably around that same number with a larger number of weeks in enterprise inventory. And then I think internal company inventories you could readily see from a review of their financials. Benjamin A. Reitzes - Barclays Capital, Research Division: Okay. And then, can you talk about the cash impact you're looking at? I assume I don't think, Wolfgang, you mentioned the CapEx, and it maybe hard to say. But it looks like you got to spend money on equipment on this. And we're just wondering is the cash flow impact more than the loss? And to what degree? And then the follow-up to that is then you have insurance, so I assume there's some cash recovery. So, I guess, your best guess on cash, the puts and takes, and what we should deduct. Wolfgang U. Nickl: Yes, I can give you some guidance there. Obviously, you start at the last levels that were specified. Depreciation runs at about $160 million that you add back. For the capital that we've already received and that we are obligated to pay and that we'll pay, you can assume roughly $150 million. That does not include replacement capital. As Tim said, it's simply impossible for us to estimate that at the current point in time. As you know, we have about $31 million of scheduled debt repayments every quarter. And we do expect some impact on the working capital, in particular, as we support some of the suppliers that are hit very, very hard by this. If you assume $100 million impact just as a working assumption, you would see that our cash impact, based on the guidance we have given, is anywhere between $375 million and $475 million. And again, that excludes the one-time expenditures that we will incur for incremental services, replacement equipment, et cetera.

Mark Moskowitz with JPMC. Mark A Moskowitz - JP Morgan Chase & Co, Research Division: John, a hypothetical for you. If WD had all of your facilities, let's say, in Singapore and Malaysia, what would be the relative decline sequentially in units due to components because of the Thailand flooding. I'm just trying to get a sense of what the ramifications are for not just WD but for the broader industry. Would you still guide to 22 million to 26 million units or would it be a little higher? John F. Coyne: I think, Mark, Tim indicated that the immediate constraint for us as we enter November here is the slider fab capacity that is currently offline. And we're making concerted efforts to take that away from being -- become the first constrained item. Next set of items are components. And as Tim said, I think it's too early. We are beginning to develop a reasonable understanding of how that component availability and the actions in train in our supply base affect WD. It's still ongoing in terms of -- many supplier facilities are shut down in order to assure the safety of their employees and to allow time to try to protect equipment and so on. But those facilities may or may not be subsequently inundated and the surrounding roads and access may or may not be passable in the near future. So it's a very developing situation that we're watching. Right now, there's a significant degree of uncertainty as you saw in Wolfgang's numbers around our estimates as to what we can accomplish. And frankly, we're much more concerned about that and our ability to support our customers and to restore our business than we are in looking at what's going on in the rest of the industry. Mark A Moskowitz - JP Morgan Chase & Co, Research Division: Maybe you could focus on the fundamentals from the prior quarter, December quarter. Could you just weigh in, if you could, in terms of the desktop, trend line. Desktop seems to be a little different than usual in terms of the sequential movement. Was that related to more and more ocean shipments in the prior quarter, or back-to-school and holiday season? Or what was going on there? John F. Coyne: I don't think there was anything out of line with expectations. I mean, we saw flattish desktop and a little bit of growth in notebook. But pretty much in line with expectations right across the mix of products and markets and I think we had said 170 to 175, we came in at 176 for the market. And I don't think there was anything significant in kind of pattern changes within that market. Maybe one little thing, Europe was maybe a tad stronger than we expected and the U.S. was maybe a tad weaker than we expected.

The next question comes from Jayson Noland with Baird. Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division: Is it fair to assume that March quarter constraints could be more severe than the December quarter, just given your entering this quarter with an inventory buffer? John F. Coyne: Yes, I think the inventory buffer is right through the pipeline, so you would have to estimate that, that would be the case. Because people, in our case, some of our inventory obviously is compromised because of the flooding. In others, they probably have more inventory and the pipeline can use it. And the same thing from the suppliers, had inventory in the pipeline that is currently getting used. So you would have to surmise that the -- that it would be more difficult in the next quarter than in the current quarter. Plus, I think people in this quarter tend to bring a little bit heavier inventory of finished goods because it's front-end loaded. And so consequently, there's probably a little bit of tailwind from that too that might be there from other quarters. So yes, I believe so. Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division: Okay. Tim, that makes sense. And last question from me. Is there anything you can say at this point on the timing of what the integration with HGST would look like and how much exposure does HGST have to Thailand? John F. Coyne: I mean the timing, we're eagerly awaiting for the time-out of the EU process, 30th of November. We're working very hard with all the other regulatory authorities to try to bring them to a conclusion around about the same time. And we will, as soon as we have regulatory clearance, be looking to consummate the transaction as soon as possible. In terms of Hitachi's footprint in Thailand, we believe that their 2 facilities, significant I think probably a little less to Thailand's output relative to total output than WD. And those facilities are outside of the current flood area. As to their supply lines and so on, we have no information.

Keith Bachman with Bank of Montreal. Keith F. Bachman - BMO Capital Markets U.S.: I wondered if you could just speak to what you think happens to pricing if the TAM is called 170 million units but components -- there are some components that are 60% out of Thailand, I mean there's going to be a material gap in the availability of drives. What happens to pricing you think in the December and March quarters with what looks like to be very severe shortages of drives? John F. Coyne: Again, we're going to have to look at the basics behind what drives it, what drives pricing. And obviously, supply is a significant factor. But as well as that, there will be extraordinary efforts carried out by everybody in order to try and see if they can get as much volume into the supply chain as possible. And that will require expediting charges, it will require logistical charges and it will require a significant amount of extra effort, probably extra overtime working and just to mention a few. So that will have to be recovered in the pricing by the people that are doing those extraordinary efforts. And we will have to give some simply monies to the suppliers in order to be able to do that also. So it will be -- I think there'll be upward pressure on pricing right through the supply chain. Keith F. Bachman - BMO Capital Markets U.S.: Okay. Let me ask a follow-up then, if I could. If you took the choice of buying new equipment and trying to integrate equipment and drive facilities, what's that process timeline? John F. Coyne: So it depends on the type of equipment. And if it's a test equipment for instance. And in our case, if you look at what has been submerged, the fiber fab equipment has been submerged. Obviously, we've had some test equipment submerged although we have electronics removed from that. And some HGA [ph] equipment, although that's a relatively small percentage of our total volume. So in the case of test equipment probably can be done. If you are to replace it with new equipment, probably can be done in the 3 to 5 month region. Assembly equipment can probably be done -- again, making assumptions that the people that make this equipment are not dependent on the componentry [ph] and selection [ph] around the affected areas. And then if it has anything to do with wafer- and fab-type equipment, it's obviously a longer lead time. Probably, you're talking about somewhere in the 9- to 12-month region in that particular case.

Bill Shope with Goldman Sachs. Bill C. Shope - Goldman Sachs Group Inc., Research Division: How should we think about how this potential impacts your future product transitions and the roadmap for 2012? Or at least how should we think about this? And I recognize that this is an unprecedented and very unfortunate situation to try to make these types of predictions. John F. Coyne: I think that's an area we're also very focused on. I think Wolfgang's OpEx guidance gives you some hint as to how we're thinking about that, we're viewing this entirely differently from the 2008 economic collapse, where we were looking at a projected fall-off in demand and sizing our business appropriately. We're looking at this as a short-term interruption of our ability to manufacture. The demand side of our equation continues to be highly robust and our challenge is how to address that as quickly as possible and as effectively as possible. So we're committed to ensuring that when we get back into full production, we're producing up-to-the-minute products that are responsive to customer need at that time. So we're continuing our investment in engineering, we're fairly focused on expanding activity here in the short term in our U.S. prototype manufacturing facilities and we will be carving out a piece of the Malaysia manufacturing capacity, which is currently dedicated to future products and product development. And that will be maintained focused on future product development.

Kevin Hunt with Auriga. Kevin M. Hunt - Auriga USA LLC, Research Division: I just have a follow-up question on the Hitachi transaction. Will there be any reason why this would affect -- the issue in Thailand will affect that? And how -- maybe you can help us understand how that might impact your integration of the Hitachi, assuming it will have some impact? John F. Coyne: I think the flexibility that a post-combination environment gives us relative to mixing and matching of available parts, of all available production tooling, et cetera, getting this deal done quickly is very beneficial to the overall return of the industry supply and, therefore, very beneficial to customers. So all of the things that we said about the deal and why it was good for our customers, good for us, good for our employees, good for our suppliers, all of those things hold true and have been amped up by the current situation. So we're very eager to get to grips with this and immediately move into a consummated deal that can get regulatory approval.

Ananda Baruah with Brean Murray. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: I guess, to that end as well, John, is that sort of another way of saying that, this could actually help push the deal through -- kind of push it through faster maybe than, you know, 4 weeks ago? John F. Coyne: Well, I would certainly hope so. And that I believe the regulators would view their role as being to protect the consumer. And I see no better way to protect the consumer than making high-quality product highly available. And so I would hope they would adopt that view. We will certainly be pushing in that direction. And if we continue to work with them to propose what we believe are clear benefits of the deal. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: And then to that end, recognizing that there's not great visibility into the [indiscernible] circumstances, to what extent, if any, might the situation in Thailand impact -- I guess, what you and Hitachi had envisioned sort of together in terms of production, integration, sharing, things of that nature as being an important part of the, I guess, of the accretive benefit of the deal? John F. Coyne: I don't think there's any. I mean, the deal -- we did the deal as a long-term deal and we believe that current situation is a -- I don't want to downplay it. It's very serious situation, but it is short term in nature and we will recover from it. And we view the benefits of the deal as long term but the quicker we get the deal done, the faster we're going to access those benefits and pass them on to our customer base.

Joe Yoo with Citi. Joe Yoo - Citigroup Inc, Research Division: I actually want to go back to the inventory levels at the OEM jet hubs. You talked about 2 weeks. But my sense is that during the end of the quarter, generally, that inventory level goes down seasonally because OEMs pull more inventory than usual. Is that a correct assessment? John F. Coyne: It's probably correct that some of the OEMs tend to skinny out inventory a bit at the end of their quarter. But most of the OEM volume that we support has different quarter ends than us. They're offset by a month, so the major -- a number of the major OEMs are -- this month are in their run end to the end of their quarter. Joe Yoo - Citigroup Inc, Research Division: Got it. My second question's for Wolfgang. If you look at the revenue and the unit guidance, am I correct in calculating that ASPs will actually go down meaningfully sequentially? So I wanted to reconcile your comments on pricing potentially being favorable with your ASP's sequential decline. Wolfgang U. Nickl: No, I think you need to review the math. In the revenue guidance, there's a small portion of products that are not price-dependent in there as well but implied in our guidance is marginally increased pricing.

Aaron Rakers with Stifel, Nicolaus. Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division: I guess, I want to ask kind of beyond just the equipment restart time, what is the process as far as you guys having roughly 50% of your revenue coming from 10-key customers. What's the process of qualification or the cycle for that matter as you turn facilities back on? Because I think some of the OEMs qualify not only just the drive but the actual manufacturing facility, the equipment and even the upstream suppliers. So how does that factor into the time to recover, I guess, is the question? John F. Coyne: I think the -- typically, yes, we have an internal qualification process that as we bring up any new facility or any new piece of equipment, there's a prescribed process that we go through to validate it. And I'm very confident given the discussions I've had with all of our major customers over the past several days as this situation has emerged, that with the strong support we're receiving from all of our customers that we will work out a parallel process where our bring-up qualifications are done in parallel with the customers' requirements so that, as we're ready to press the go button, everybody will be satisfied that, that is a controlled, high-quality, ready-for-mass volume situation and we won't lose any time by overlapping -- by doing those qualifications sequentially. Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division: And then as a follow up, just looking at the guidance again, looking at the numbers, it's pretty clear that you're assuming no, if not a negative gross margin. So I guess the question on that was, I think, historically, Western Digital's very been effective in leveraging a variable cost structure. Can you help us understand how much of your COGS line is kind of variable in nature relative to fixed and kind of gauge that overhead that basically lack of utilization presents on the gross margin line? Wolfgang U. Nickl: Yes, I'll give you a couple of pointers. First of all, you're right, the guidance actually implies negative gross margin. We're dealing with a substantial portion of what we will call fixed cost. You know, what the depreciation is but there's a very significant factor, the infrastructure, that will stay there since it's a small, short-term issue to deal with. Then we're also dealing with certain costs that you would ordinarily describe as variable but they're already sticky because we're paying our workforce in Thailand, for instance. And then you're dealing with cost related to your input materials. Those are from a mix between internal and external components and then a general, I think you mentioned it, expediting of input materials and that's all affected in the mass. But you're right, it's a negative gross margin.

Katy Huberty with Morgan Stanley. Katy Huberty - Morgan Stanley, Research Division: I understand there's really no historical precedence for this, but how do you in the industry decide over the next couple of quarters how to allocate the much smaller number of units across the various channels, OEMs distribution and retail. Because it seems like OEMs could gobble up everything that's available and still be supply-constrained. And so is this strategy to give everything you can to OEMs? Or do you feel like you need to fairly balance the units available across all of the channels? John F. Coyne: In looking at satisfying our customer base, we will focus on being fair and equitable to all branches of our business. The business that's prosecuted directly under the Western Digital brand, as well as that of our OEMs and that of our distribution partners. And to that end, we stopped shipments last weekend in order that we could get our arms around where everything is and ensure that as we began shipping again, that product was allocated appropriately to the long-term established business partnerships in our customer base. Katy Huberty - Morgan Stanley, Research Division: Okay. And then just a quick follow-up. I think you said the vast majority of your slider production is in Thailand. Is that to the tune of 90%? Is it that high? And are there third parties that you could work with that could supply you that component? John F. Coyne: It's not that high. But it is a majority, the substantial majority of our production. And yes, we are working with partners, have been working with partners for some time to rapidly ramp our partnership accessible capacity. And also, we're working to execute plans to bring some of our own capacity back up in short order. John F. Coyne: Well, thank you all very much for tuning in to the call today. As you can imagine, we'll be highly focused in the weeks and months ahead to ensure the continued well-being of our employees and to complete our business recovery from this significant but temporary setback. And we will keep you informed of our progress. Thank you.

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