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

Keith F. Bachman - BMO Capital Markets U.S. Richard Kugele - Needham & Company, LLC, Research Division Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division Robert Cihra - Evercore Partners Inc., Research Division Scott D. Craig - BofA Merrill Lynch, Research Division Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division Mark A Moskowitz - JP Morgan Chase & Co, Research Division Benjamin A. Reitzes - Barclays Capital, Research Division Scott Schmitz - Morgan Stanley, Research Division Sherri Scribner - Deutsche Bank AG, Research Division Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division Mark S. Miller - Noble Financial Group, Inc., Research Division

Good afternoon, and thank you for standing by. Welcome to Western Digital's Third Quarter Financial Results for Fiscal Year 2012. [Operator Instructions] As a reminder, this call is being recorded. Now, I'll turn the call over to Mr. Bob Blair. You may begin.

Thank you. I want to mention that we will be making forward-looking statements in our comments in response to your questions concerning growth in the storage industry, the timing of our pending divestiture transactions with Toshiba, capital spending and industry conditions and our financial results expectations 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 January 27, 2012. We undertake no obligation to update our forward-looking statements to reflect new information or events. In addition, references will be made during this call to non-GAAP financial measures. Reconciliations of the differences between the historical non-GAAP measures we provide during this call for the comparable GAAP financial measures are included in the investor's information summary posted in the Investor Relations section of our website. The forward looking guidance we provide during this call excludes charges related to the Thailand flooding net of other recoveries, expenses related to the HGST acquisition and any impact from the pending divestiture transaction with Toshiba. Because of the amount of these items, it is not known to us at this time, but 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. [Operator Instructions] 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 will now turn the call over to Chief Executive Officer of WD, John Coyne. John F. Coyne: Thank you, Bob. Good afternoon, and thank you for joining us on today's call. After my introductory remarks, Wolfgang Nickl, our CFO, will review our Q3 financial performance and the outlook for the fourth quarter. We are delighted to report these exceptional financial results for the March quarter, demonstrating the potential of the new WD with just 3.5 weeks of HGST results added to the standalone WD business. Competing in the marketplace through our WD and HGST subsidiaries, we now have the product portfolio, technology resources and the people to focus on serving the needs of a significantly expanded customer base and to better address the tremendous growth opportunities in the storage industry in the years ahead. IDC expects the amount of digital storage capacity shipped across all digital storage media will more than double by 2015 from 767 exabytes in 2012. With the HDD storage responsible for roughly 70% of exabyte shipments over this time frame, driven by mobility, connectivity and the cloud. These dynamics create the need for an increasingly diverse set of products and technology capabilities from storage solutions providers. Rotating magnetic storage continues to be the dominant technology in this highest volume, high-capacity storage markets based on availability, scalability, usability and value. The recently updated IDC forecast calls for hard drive unit volume growth of 10% per year from 2011 to 2016, another indicator of the tremendous growth opportunity at hand for the new WD. When we announced the HGST acquisition in March 2011, we emphasized that this would be the hard drive industry's first ever transaction involving 2 profitable and growing companies, and that this was significant because of the resultant customer breadth and product breadth, depth of technology, people and scale. We are highly focused on what we believe is a tremendous revenue opportunity for the new WD based on the value proposition offered to our customers by each subsidiary. We aim to continue the strong track record of customer delight and superior financial performance of each subsidiary by delivering efficiencies consistent with regulatory requirements. It is noteworthy that during more than 12 months of regulatory reviews and 2 natural disasters, WD and HGST teams maintained full engagement with customers and continued to invest and execute to develop and deliver multiple innovative products. I call your attention to an impressive list of recent innovations outlined in the expanded quarterly investment summary report on our website. Some examples include: The shipment of the industry's first 2-terabyte, 2.5-inch My Passport hard drives for mobile personal storage; the industry's first 1-terabyte 10,000 RPM, 2.5-inch WD VelociRaptor hard drive for high-performance workstations and extreme gaming platforms; the industry's first 4-terabyte, 7,200 RPM, 3.5-inch Ultrastar drive for the capacity enterprise and cloud infrastructure markets; the industry's first SAS enterprise class SSD to use 25-nanometer single-level cell NAND flash technology, the 400-gigabyte Ultrastar SSD; the industry's first 7,200 RPM, 2.5-inch, 7-millimeter, 500-gigabyte Travelstar mobile hard drive, extending our lead in the low-profile drive market, where to date, we have shipped more than 25 million 7-millimeter hard drives for use in slim notebooks and Ultrabooks. We also announced the formation of a consortium with SanDisk, Twentieth Century Fox and Warner Bros. to advance digital distribution and consumer ownership of high-definition movies. With the HGST acquisition now closed, we're working closely with China's Ministry of Commerce to finalize our operations plan in compliance with the remedy outlined in MOFCOM's approval decision last month. Concurrently, Toshiba is awaiting the completion of the regulatory review process, associated with its agreement to acquire certain WD and HGST assets, a process that is expected to be completed within the next 90 days. In the meantime, we continue to support customer demand for the products covered by the anticipated Toshiba transaction. I'm also pleased to announce today that the recovery activities related to both WD operations and those of our supply chain partners impacted by the Thailand floods have reached the point where we now have the capability to adequately meet anticipated customer demand in the current quarter and beyond. Our subsidiaries are now focused on profitably serving customer needs in terms of both mix and volume. We have navigated successfully through a series of significant events in the last year, including the earthquake and tsunami in Japan, which had a substantial supply chain impact on both HGST and WD and the floods in Thailand, which knocked out almost 90% of WD's slider availability and 60% of WD drive assembly capacity and a substantial portion of the industry supply chain. Concurrently, we completed the largest acquisition in the history of the hard drive industry. I want to thank our customers and suppliers for their strong support throughout this time and to congratulate and thank all of our employees whose dedicated efforts have delivered such outstanding results. As I look at the opportunities for Western Digital in the quarters and years ahead, I cannot think of a more exciting time to be leading this talented team. We have just delivered the strongest revenue and profit performance in the company's 42-year history, with the contribution of less than a month of HGST performance. We have a series of upside opportunities that have energized our teams against the backdrop of a recovering industry TAM in the near term and the storage industry's significant growth opportunity in the long term, we are focused on delighting our customers with an improving mix of compelling products, growing to full utilization of our installed capacity over time and continuing the measured deployment of our newer technologies. With that, I will turn the call over to Wolfgang for a review of our Q3 financials and our outlook. Wolfgang U. Nickl: Thanks, John. A summary of historical financial information has been posted to the Investor Relations section of our website. We have also included a detailed GAAP to non-GAAP reconciliation in this package. We'd also like to remind you that we have announced our Investor Day to be held on September 13, 2012, here in Orange County. On that day, we expect to discuss our strategy for our core business, growth opportunities, our go-forward business model and our cash utilization strategy. Today, I will first summarize our financial performance for last quarter and will then provide a range of expected financial results for the June quarter. The data of our third fiscal quarter includes HGST results from the acquisitions date of March 8 through the end of our quarter. Revenue for the March quarter was $3 billion, including $614 million for HGST. We shipped a total of 44.2 million hard drives at an average selling price of approximately $68. OEM sales represented 64% of revenue, distribution channel sales were 28% and retail sales were 8%. The retail channel percentage was lower than prior quarters due to a total available market that is running at about 1/2 of last year's run rate and Hitachi's lower presence in that channel. Our gross margin for the quarter was 32.2%. This includes acquisition accounting-related adjustments. Excluding these adjustments, non-GAAP gross margin was 35.5%. Average cost per unit continues to run above pre-flood level due to lower capacity utilization, increased use of air freight, a higher mix of externally procured heads and higher costs for other components as a result of the flood's impact on our supply chain partners. R&D and SG&A spending totaled $420 million for the March quarter. SG&A included acquisition-related expenses of $33 million and $3 million of amortization expense related to intangibles recorded through the purchase price allocation. R&D and SG&A spending reflect continued investments in new product and market development, particularly in the branded and enterprise areas. Flood-related expenses totaled $36 million, which was offset by $21 million in insurance recoveries and other cost reimbursements. During the quarter, we filed a significant claim for property damage, which is currently in the early stage of evaluation by our insurance carriers. We also expect to file business interruption and other claims. Net interest and other non-operating expense was $4 million, including $1 million of credit commitment fees prior to the acquisition. Tax expense for the March quarter was $55 million or 10.2% of pretax income. Our net income for the March quarter totaled $483 million, a $1.96 per share. On a non-GAAP basis, net income was $619 million or $2.52 per share. Turning to the balance sheet. We generated $1.2 billion in cash from operations during the March quarter, and our free cash flow totaled $1.1 billion, significantly enhanced by the timing of the acquisition. Capital spending and depreciation and amortization for the March quarter totaled $139 million and $188 million, respectively. Through the first 9 months of fiscal 2012, we have spent $393 million on capital. We expect capital spending of approximately $357 million for the current quarter, bringing the total for fiscal year 2012 to approximately $750 million, inclusive of HGST capital spending for the June quarter. Capital expenditures for the June quarter will be driven by flood recovery, technology investments and investments n process capability as opposed to capacity expansion. As a reminder, we report capital spending based on cash disbursements. Thus, the capital disbursements expected for the June quarter primarily reflect capital that was received during the March quarter. Our conversion cycle was a positive 5 days. The DSO, DIO and DPO calculations, as well as inventory turns are skewed by the fact that our March ending balance sheet includes full HGST accounts receivable, inventory and account payables, but our revenue and cost of sales include only 3.5 weeks of HGST's operations. We exited fiscal Q3 with total cash and cash equivalents of $3.4 billion, with approximately $1.3 billion in the U.S. and $2.1 billion offshore. Subtracting our total debt of $2.7 billion, results in a net cash balance of $634 million. HGST's purchase price for accounting purposes was approximately $4.7 billion. While purchase price allocation included goodwill of approximately $1.7 billion and other intangibles of about $800 million. On a full quarter run rate basis, we expect the intangibles to drive amortization expense of approximately $50 million. These amounts are preliminary. Updated amounts will appear in the 10-Q we will file in early May. Let me now provide some context for our guidance for the June quarter. We expect the TAM for the June quarter in a range of 155 million to 160 million units. We believe there is sufficient capacity in the industry to support this demand. From a volume perspective, we have modeled the previously announced divestiture of certain 3.5-inch assets to Toshiba to close towards the end of May. With regard to pricing, it's important to note that our WD subsidiary was the most heavily impacted of any drive company by the floods in Thailand last October. WD asked for and received customer support to enable a rapid recovery. Now that this recovery is essentially complete, WD is forecasting pricing reflective of current market conditions. After we close the acquisition, we learned that our HGST subsidiary, which was not directly impacted by the floods, had implemented multi-quarter agreements with certain customers that provided for June pricing below March pricing subject to the achievement of certain volume goals. WD's subsidiary continues to operate with substantially -- substantial underutilized capacity and at a supply mix of external heads in excess of the subsidiary's strategic sourcing model. Both factors lead to a cost disadvantage of several dollars when compared to its pre-flood levels. While we are identifying OpEx synergies that are consistent with regulatory requirements, we are not factoring any of these synergies into our guidance, as we are currently working with China's MOFCOM to finalize the operations plan, which we submitted earlier this month. In addition, we are continuing investments in strategic growth areas such as SSD, hybrid drives and the digital home. From a gross margin perspective, we believe that product mix and cost will provide significant future upside potential for our businesses as they managed the deployment of new areal densities in a measured fashion. I also want to note that our guidance is in a non-GAAP basis. It excludes amortization of intangibles related to the HGST acquisition of approximately $40 million in cost of sales and $10 million in OpEx. We also excludes any P&L impact from the pending divestiture of 3.5-inch assets to Toshiba and any potential restructuring activities. Our forecast does not include any acquisition of flood-related expenses, nor does it factor in any flood-related insurance proceeds during the quarter. With these factors in mind, our June quarter guidance including a full quarter of HGST is as follows: We expect revenue to be in the range of $4.2 billion to $4.4 billion. R&D and SG&A spending will be approximately $550 million. We expect our tax rate to be approximately 9% of our taxable income. We anticipate our share count to be approximately 269 million. Accordingly, we estimate non-GAAP earnings per share of between $2.35 and $2.55 for the June quarter. Operator, we are now ready to open the call for questions.

[Operator Instructions] Our first question comes from Keith Bachman with Bank of Montréal. Keith F. Bachman - BMO Capital Markets U.S.: John, I wanted to get your take on the status of the inventory deficit in drives. And so Seagate's talked a lot about their perspective on how short the industry is on drives. Yet when the OEMs talk, it seem to have more than enough drives, the ODMs in Taiwan have similar comments. If you could just speak to where is the deficit in drives? And how long do you think, if there is such a deficit, how long do you think it persists? John F. Coyne: Sure. I think in terms of mobile 2.5-inch drives for the PC industry, I think we're in reasonable balance. The difference from traditional situation is that the inventory instead of being in HDD industry, JIT hubs is in the OEM's own inventory, the PC manufacturers and the ODMs. So as of today, I believe the majority of that business is being done on a direct ship from factory basis so that, that inventory shifted from HDD-owned to customer-owned. And we think that, that business is in reasonable balance relative to supply and demand and traditional inventory levels. The desktop, we think is a little short, and we'll, from an OEM perspective, we'll take through this quarter to approach a balanced situation. Likewise, in -- on the enterprise side, we think performance enterprise is reasonably balanced, capacity enterprise demand continues to exceed supply. And then when we move into the distribution channels, we're looking at inventory levels in the distribution channels that are substantially below those that were the norm pre-flood, about half the level that was typically carried pre-flood and when we look in the retail channels, a similar situation, inventories are still somewhat light. So I think we're going to see... Keith F. Bachman - BMO Capital Markets U.S.: Very helpful, John. Just my follow-up then will be is what's your expectations for September quarter, the ability to drive manufacturing, what do you say the unit TAM per output would be from September quarter? And then I'll cede the floor. John F. Coyne: Well, I think we're looking at a difficult to predict situation in that. This quarter, our estimate of the TAM supposes a 10% quarter-over-quarter growth. If we look seasonally on a traditional basis, we would have expected a flat to down demand relative to last quarter. We think that's a pent-up issue that creates that both back towards normal. We're still, I think, about 4% on a year-over-year, the 160 number for the June quarter would be compared with 166 a year ago. So there's still a little bit of catch up to do to get -- then we expect in the back of the year, we'll see typical quarter-over-quarter progression that tends to be in the 10% range. And that will translate into very substantially year-over-year increases obviously because of the flood impact in October.

Next question comes from Rich Kugele with Needham. Richard Kugele - Needham & Company, LLC, Research Division: I just wanted to make sure I understood your comments about being able to meet demand in the quarter. I mean, is that much more of a function of whether it's sourcing from TDK heads or, I guess, Hitachi's in-house ability to meet its own needs versus actually building all those sliders out of Thailand and back to pre-flood production capability in-house? John F. Coyne: Yes, Rich. The comment relates to our ability to satisfy customers with the drive-level product through both our subsidiaries. And we believe we'll be in a good position this quarter to turn our focus from building raw capacity to turning our focus to matching mix requirements within the overall capacity required by our customers in the current quarter. As I think, both I and Wolfgang noted in our prepared remarks, we still have a significant installed capacity under absorption issue from a cost perspective in the WD sub. And we are currently sourcing above the typical WD external/internal head sourcing rule, our business model that we have set for the long-term. However, as we look forward, we forecast continuing TAM growth each quarter through the balance of the year. And then sustained growth in the industry as we move forward from there. So looked at in a medium to long-term perspective, we're very excited by the opportunities, and we see substantial opportunity for us to continue to improve performance as those cost drags on the business are eliminated by growth as we move forward. Richard Kugele - Needham & Company, LLC, Research Division: Okay. And then just secondly, regarding your comments about Hitachi signing of a few LTAs at lower prices than March., can you give some quantification of just how far below and what markets might have been involved, and more importantly, your ability to perhaps prevent that type of decision-making in the future within the confines of the Chinese regulators? John F. Coyne: Well, I think, I mean, you kind of characterized; that, that might not have been a desirable action. I believe it is a highly desirable action to provide assurance of security or supply to customers and to be competitive in addressing market opportunity, thereby, increasing business with certain customers and securing that business into the future. So while the prices are lower in the June quarter than they were in the March quarter based on the total package offered to those customers, business is highly desirable and significantly accretive to the overall well-being of the business. So we're explaining the dynamics of the current market not indicating any kind of problem.

Aaron Rakers with Stifel, Nicolaus. Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division: I don't know if you can do this or not, but last quarter you talked about an expectation that your average capacity per drive would be down sequentially in the March quarter. Can you provide us any color on what that look like this quarter as we think about optimizing the mix? And what you are expecting them to be into the June quarter? And then I do have a follow-up. Wolfgang U. Nickl: Yes. The average capacity last quarter was indeed down in all the WD business, lowest single-digit percentage. And we expect that mix to pick up this quarter for the WD sub. The HGST sub mix is a little bit impacted that -- since the June quarter was a quarter where the gaming business picked up and there's a more substantial volume of gaming units and that impacts the mix there. John F. Coyne: But you could -- you should also assume that as we move through the balance of the year, we will return and both business is likely to operate at market mix. Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division: And then my follow-up question is on your guys' slide deck, you guys have a highlighted business model, gross margin, which looks like it's the prior model of 18% to 23%, 9% to 10% OpEx to revenue. I'm curious, is that the model you're out and want to talk to the Street about? Or is that just an old -- reference to the old model because I think guys have given flavor for higher gross margins in particular post the; Hitachi? Any color on how you're thinking about the long-term model and the context of that? Wolfgang U. Nickl: Good observation, Aaron. It's the old model. We haven't officially updated our model. We expect to do so in our September Investor Day. We've given some directional color in the supplemental information that we've provided right when the acquisition closed in -- on March 8, I believe. And from that directional guidance, you can imply that we believe that the gross margin is slightly higher than the June 19 to 24 that we said a year ago. And we also highlighted that the OpEx might be a little bit higher and well, you have to wait for the outcome of the operating plan, operations plan that we're concluding with MOFCOM to specify that. And again, the go-forward model will be communicated at the Investor Day on September 13. Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division: And on that, it looks like you're implying about a 30% to 31% gross margin this current quarter. Is that fair? Wolfgang U. Nickl: For guidance for the current quarter, that's correct.

Rob Cihra with Evercore Partners. Robert Cihra - Evercore Partners Inc., Research Division: 2 questions if I could. One, I'm just wondering -- I know you didn't in this, but I want to know if you're planning to or not to report or give even any color on the split between WD and HGST units. And then separate from that, if I look at your OpEx guidance of $550 million, it would imply no cost savings from HGST, which I get and I understand, as you guys have communicated, obviously the regulatory constraints. But are there not even any amount of OpEx cut there or savings or synergies you think you're actually be able to get the near-term before 2 years? Wolfgang U. Nickl: Yes. Well, so the -- on your first question, we're not planning in the future to split out the 2 businesses. We're going to split out what the SEC requires. In terms of the $550 million in OpEx, like we said, we've submitted the operations plan to MOFCOM. We're working on certain synergy proposals that are compliant with this plan and what we're going to report what these synergies are when we have finalized the plan with China's MOFCOM. Robert Cihra - Evercore Partners Inc., Research Division: Okay. And so that's your most sort of conservative take at this stage or your most realistic, the $550 million? John F. Coyne: I think it's realistic for the current quarter in that we have to complete our negotiations. Also, I think Wolfgang mentioned, we are continuing to invest in emerging opportunities for hard drives and beyond hard drives. So we're continuing to actually to increase spending in certain areas of the business from an OpEx perspective.

Scott Craig with Bank of America. Scott D. Craig - BofA Merrill Lynch, Research Division: 2 questions. John, can you first address the TAM of 155 million to 160 million, and circle that around with the comments that you think you'll be able to meet full customer demand? Because I would have thought, given the inventories and the distributor being half the level of normal and a TAM prior to the flood level of hanging around that 170 million mark, that you wouldn't be able to meet customer demand here in the near term. And then secondly, Wolfgang, on the guidance for the June quarter from a revenue perspective, can you provide a little bit more granularity on that with maybe ASPs and units and sort of a mix, where you think that's going to be from a customer segment? John F. Coyne: Right, so this is John. And my comments on the inventory versus demand, I think we'll be able to meet the true market demand. I don't think we'll do much in the way of rebuilding inventories or recreating the traditional model of where those inventories are and the timing between cutting an order and delivering the product to where it's meant to be. We're using air freight almost exclusively today. The velocity through the distribution channel is very high, and I think as the momentum builds in distribution and the volumes get back to pre-flood levels and as momentum builds back in retail, back to -- towards to pre-flood levels, I think that's the first order of business is to fuel that growth and support it. And then the second order of business, which comes later in the year or possibly early next year, is to see the inventory and distribution models revert to a more normal level of inventory and velocity of that inventory. Wolfgang U. Nickl: And on your revenue question on the $4.2 billion to $4.4 billion, I mean, I highlighted a few elements regarding to WD's situation now being more recovered from the flood and having pricing reflective of current market conditions. John and I both commented on the multi-quarter agreements that Hitachi has put in place. We also talked about the mix in -- on the HGST side that were reflected by gaming, and all that you need to take into consideration that some volume goes away with the Toshiba divestiture that we are planning for the end of May for this guidance assumption. And overall, like we said before, overall, we're operating below market mix. Like John said, we think that we'll make this up over the next couple of quarters. But those are some of the assumptions that went into the revenue guidance.

Next question comes from Ananda Baruah with Brean Murray. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: I guess, along those same lines, but on the gross margin line, can you give us some sense of kind of how long the Hitachi game is run for? Should we think of them through the balance of this year? And now that you guys think that sort of we're going to be moving in market pricing here for the noncontract business, should we think of the June quarter gross margin guidance as being, I guess, sort of the baseline to work from for the balance of the year and then we can use our assumptions around channel pricing and mix for the noncontract portion to sort of guide our models. Any color there will be helpful. John F. Coyne: I think there's 2 elements. As always, there's 2 fundamental elements to margin. One is ASPs and the other is unit costs. And the ASPs are going to be what the market dictates they be. And on the cost side, we currently have some cost matters to our business that are a result of the floods. Some those are industry-wide and are being reflected on through into an overall step up in ASPs. But some of those are company-specific, and the company-specific ones will be addressed by a combination of addressing a growing TAM, and if we do that and execute against the opportunity, as well as we have in prior years, we should expect that we will grow with the TAM or ahead of the TAM. And that will address some of the under absorptions we have. We'll also help with the ratio of external heads to internal heads and then improve the utilization of our head component business, and consequently, improve our cost structure there. So we -- there's substantial opportunity there. Also, as a result of the floods, we, in order to focus on supporting our customer's immediate requirements and utilizing our assets and our supply base as effectively as possible, we delayed some deployment of our newer technology products, which, as we move up in our deployment of the newer technologies, as a proportion of our total shipments, again, we expect to see a substantial impact on our cost profile in that. So I'm very encouraged by when you look at the guidance and you look at our relative competitive position on margin, and then you'll see that we have substantial opportunity to improve our cost structure as we move forward for the balance of the year. I think you see that our comments in the supplementary information on March 8, where we indicated that a profile of the business, on a post-acquisition basis, being very close in terms of participation in different market segments, being very close to that of our largest competitor, that we expected that the metrics driving the business will be equally close. And so it will take us a few quarters to get there, but I'm highly confident that we have what it takes. And I think we've got a track record to demonstrate that our confidence is not misplaced.

Mark Moskowitz with JPMC. Mark A Moskowitz - JP Morgan Chase & Co, Research Division: John, I want to come back to your commentary about you have a series of upside opportunities. It excites the teams. Some of the research we've been doing suggests that the enterprise system OEMs are a little frustrated by one of your major competitors in terms of the pricing environment over the last few months. Are you with either with WD or Hitachi subsidies -- or excuse me, subsidiaries or both of the subsidiaries seen increment opportunities for dual and triple sourcing for these system OEMs? John F. Coyne: Well, we believe we've got a tremendously strong enterprise portfolio between the 2 subsidiaries. We believe we have a marketplace that is ripe with opportunity, and we're going to pursue it vigorously. Mark A Moskowitz - JP Morgan Chase & Co, Research Division: Then a follow-up, just around on CapEx, have there been any instances where Western Digital or Hitachi had to capitalize some of your Tier 1 or Tier 2 suppliers who were hurt by the flood, and how did that play out? Wolfgang U. Nickl: That was not any big numbers there. We supported some supplies very, very early on with early payments, but it was a very immaterial.

Ben Reitzes with Barclays. Benjamin A. Reitzes - Barclays Capital, Research Division: Can you guys just get a little more granular about ASPs? I mean when you back into the numbers, it would seem that you guys are thinking about a double-digit decrease anywhere like up to 15% sequential decrease in pricing. And I just wanted to kind of you guys to expand upon that? Just -- and then I have a follow-up. Wolfgang U. Nickl: Yes. We didn't imply any percentage increase. We didn't give the volume number. I think we explained what the assumptions are for the ASP that goes into our guidance. Benjamin A. Reitzes - Barclays Capital, Research Division: Well, the other question I had is that prior to the flood, you guys were doing 58 million in volume and Hitachi was doing close to 30 million. What is the run rate number we should assume? And I think you -- people are assuming around 6 million drives for the desktop assets that's being sold. So what is the full capacity of the new company, the run rate kind of full demand in terms of units? And what you're able to do once we get to the September quarter? John F. Coyne: I mean, I think it's fair to take in terms of capacity to assume that from a invested capital perspective, you're correct in the 58 and 30 facilitization that was in place pre-flood. You're also correct in looking at divestiture to Toshiba. Now over many, many years, I think we have demonstrated that the installed capacity is -- I mean, it's relevant in terms of the depreciation numbers. It's not relevant in terms of how we utilized that capacity. We plan capacity utilization based on our read of market requirement. And whether that is as of we are at the current moment, planning in this quarter to run less than the installed capital base would allow in order to match the demand that we perceive to be available to us profitably. We've also demonstrated in history a very good capability to scale our business upward as demand appears and to do that in a very timely manner and a very efficient manner from a dollar per incremental output perspective. So I do anticipate we'll have some drag of overall invested capital, and hence, depreciation over the next several quarters as the TAM rebuilds and as we earn our share of that TAM. And I think as we look at the longer term for the overall business, we will, in calendar '13 and beyond, be looking at deploying those previously demonstrated skills of adding judicious capacity to meet opportunity in a timely manner. Benjamin A. Reitzes - Barclays Capital, Research Division: Okay. Well -- then the final thing is just with regard to you generated a ton of free cash flow, $1.1 billion, and if you have a few more quarters like this, you're going to put away a lot of cash. Is there any additional thinking on returning cash to shareholders of the company? And that's it for me. Wolfgang U. Nickl: Yes. Let me first comment on the free cash flow for the last quarter, which was kind of untypical and highly related to the timing of the acquisition. The way be how you should be thinking about free cash flow, and you're right, this company has the potential to create a lot of cash. If you just take this quarter, for instance, at the midpoint of our guidance and 269 million shares, if you apply the gross margin and deduct the OpEx and then take the $350 million CapEx -- or $357 million CapEx, total amortization and depreciation excluding the intangibles that we just added somewhere to $280 million range. If you assume a constant working capital, no investments in working capital, that gives you a free cash flow around $600 million or so. So you're right, that's very substantial. We're actively looking at the cash utilization strategy. And I pointed out that's one of the topics that we're going to cover in September, and we'll update you then.

Scott Schmitz with Morgan Stanley. Scott Schmitz - Morgan Stanley, Research Division: Now that the industry is able to meet demand, do you have a time frame for when you think your market share normalizes kind of back to the normal levels that would have, if you consider Hitachi and WD combined? John F. Coyne: The market share is about earning customers' business, and we think we're pretty good at that. We're going to try very, very hard to be good at that and continue to be good at that. And I expect that, that will be reflected in the position at the end of June quarter, which will be the first quarter of execution with both subsidiaries under Western Digital ownership. And I think that will give a baseline starting point from which excellence and execution from a technology deployment, product portfolio, service levels and value, will then drive forward from there. Scott Schmitz - Morgan Stanley, Research Division: And when you get to that kind of normalized market share level, what does pricing look like? Are we back to the pre-flood levels? Are we reset a little bit higher? Any other comments you can give on the pricing side? John F. Coyne: No. I think we have indicated previously and I'll reiterate that expectation that the costs incurred by the industry, both to recover the lost capacity relative to the flood and to de-risk the business for our customers in terms of the moving the supply chain around to create a much less concentrated profile, those things have cost attached to them, and I believe that it will be affected through to the customers. So we expect that pricing in the drive industry will continue to be elevated relative to pre-flood levels. We, nevertheless -- that elevation of pricing notwithstanding, we believe that our drives still represent best value in the technology supply chain for the industries we support. And that, that value needs to be reflected in the business model of the hard drive company like ours and to return to our investors for developing and deploying technology at this level.

Sherri Scribner with Deutsche Bank. Sherri Scribner - Deutsche Bank AG, Research Division: I just have 2 clarifications. Wolfgang, in terms of interest expense for next quarter, I don't think that you said anything. Can you give us some sense of what you expect that to be with the new debt? Wolfgang U. Nickl: Sorry, I didn't catch. Interest expense? Sherri Scribner - Deutsche Bank AG, Research Division: Yes. Wolfgang U. Nickl: That's right around $15 million. Sherri Scribner - Deutsche Bank AG, Research Division: $15 million, okay. And in terms of the units that your shipped this quarter, can you give us a sense of how many of the units were SAS and fibered channels, so pure enterprise versus near-line products either Western Digital and Hitachi combined or separate or whatever? Wolfgang U. Nickl: Yes. We're usually not breaking out that piece. We've always just give then the enterprise number. Sherri Scribner - Deutsche Bank AG, Research Division: Will you break that out in the future? Wolfgang U. Nickl: I have no current plans, but we're thinking about it.

Jayson Noland with Robert W. Baird. Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division: I wanted to come back to the retail TAM being half what it was a year ago. I assume some of that's availability, but is some of it also cloud storage? John F. Coyne: No. I don't think it's cloud storage. I think it's -- when you think about the retail channel, where the price of the product on the retail shelf is dominated by the cost of the hard drive within that package. Consequently, the increases in hard drive pricing immediately post-flood, there were 2 impacts on the retail channel. One, was availability. The second was that the price increases on drives were immediately reflected in the full level of the increase to the consumer. If you look at all our other markets for hard drives, the hard drives incorporated in a larger system, where the hard drive is maybe 10%, 15%, at most 20% of the system value billing material. And consequently, the price increases in those markets had less chilling effect on purchasing behavior. So I think there's a 2-part element. The third element that affected the retail channel was that absent a clear visibility into supply, the retailers were reluctant to place ads and give prominence to the category because they were not sure that they could fulfill the demand that they would create by doing those promotional activities. So you take those 3 elements -- have contributed together. We believe the demand for personal ownership, availability, security of content and the value proposition of owning a terabyte of your own secure accessible data for less than $100 compared with renting that same capacity at 10x or 20x that cost over a reasonable expectation of lifetime of that data in the cloud, we believe the personal content ownership, both from a safety and security and keeping other people's eyes off it, as well as the value proposition, offer a compelling value. And so we believe we're going to see the retail market rebound as the constraints I outlined go away. And in fact, we see the way that the cloud enables mobility and the way that it enables people to easily generate content on mobile devices and consume content on mobile devices, all plays into a significant increase in demand for personally -- personal storage for personal content and home-based personnel network-attached storage or personal cloud storage, and we're addressing both of those markets. Now just to hedge our bets, of course, we're very strong players in the cloud market. In fact, the entire cloud would not exist, were if not for the backbone technology of performance and capacity enterprise product. So either way, we win. Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division: And a follow-up with Wolfgang on synergies between the 2 subsidiaries, could you talk about that a little bit generically? I assume that some it could include minimizing product overlap, but not really sure what you can and can't do there with the regulator. Wolfgang U. Nickl: Yes. I think we'll address that once we have the operations plan finalized with China's MOFCOM.

Mark Miller with Noble Capital. Mark S. Miller - Noble Financial Group, Inc., Research Division: With a previous comment, there's been a lot of figures thrown around for the percentage of drives that are going to be divested. I think someone mentioned previously, it was 6 million. Can you give us any ballpark figure because we're hearing numbers all over the place. Wolfgang U. Nickl: Yes. I mean... Mark S. Miller - Noble Financial Group, Inc., Research Division: Is 6 million being the ballpark of the drives divested? Wolfgang U. Nickl: Yes. If you to -- in the FTC's website, there was actually a pretty good description of the divestiture. And from the number of lines that are being mentioned, you can conclude that it's anywhere in the 5 million to 6 million per quarter capability. And that's probably the best number for you to use that the assets that we're divesting can output in the quarter. Mark S. Miller - Noble Financial Group, Inc., Research Division: I attribute this more to the greater percentage of long-term agreements, but Seagate kind of stuck its neck out and said that they thought margins would stay above 30% throughout this calendar year. Are you saying pricing will stay up? Can you go any further on that? John F. Coyne: Well, I can't talk to Seagate's margins, but what I can tell you is we have substantial opportunity on the cost side of our business to enhance our margins, and we will compete in the marketplace to provide value to our customers on a consistent and continuing basis. And now we believe that's what we've done profitably for 10 years, and hopefully, we'll continue to do it profitably for at least another 10 and beyond. So thank you, all for joining us today. As I hope you can tell, we're very excited about the growth opportunities in the data storage industry and about the new WD's ability to participate in this market as a leader in the years ahead. I look forward to updating you on our progress.

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