Bob Blair - VP, IR John Coyne - President and CEO Tim Leyden - EVP and CFO

Sherri Scribner - Deutsche Bank David Bailey - Goldman Sachs Rich Kugele - Needham & Company Keith Bachman - Bank of Montreal Christian Schwab - Craig-Hallum Capital Aaron Rakers – Stiffel Nicholas Mark Moskowitz - JPMorgan Scott Craig - Banc of America Katie Huberty - Morgan Stanley Doug Reid - Thomas Weisel Partners

Good afternoon and thank you for standing by. Welcome to Western Digital's third quarter financial results for fiscal year 2009. (Operator Instructions). 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 on our comments in response to your questions concerning inventory levels in the June quarter, our ability to respond to future changes in demand, future investments in technology, and acceleration of our solid state drive programs by the intellectual property and technical expertise added through our acquisition of Silicon Systems, results of our restructuring activities and our expected cost and savings from these activities, our continued profitable growth, capital expenditures and deprecation and amortization for fiscal year 2009, and our financial results expectations for the June quarter, including revenue and gross margin, expenses, share count, restructuring costs, share count, and earnings 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-Q filed with the SEC on January 29, 2009, as well as the additional risk factors reported in the press release included as Exhibit 99.1 to the form 8-K we furnished to the SEC today. We undertake no obligation to update our forward-looking statements to reflect new information or events and you should not assume later in the quarter that the comments that we make today are still valid. In addition, references will be made during this call to non-GAAP financial measures. Investors are encouraged to review the reconciliation of the differences to the comparable GAAP financial measures in our press release included as Exhibit 99.1 to the form 8-K that we furnished to the SEC today, a copy of which can be found under the SEC filings link in the Investor Relations section of our website at www.westerndigital.com. I'd also like to note that copies of remarks from today's call will be available on the Investor section of Western Digital's website immediately following the conclusion of this call. I would now like to turn the call over to John Coyne, President and CEO of Western Digital.

Thanks, Bob. Good afternoon. Thank you for joining us today. We are pleased with our March quarter financial performance. A result of crisp execution by the WD team, maintaining a focus on profitability and cash generation. We managed our market participation, product mix, and costs to optimize our returns in the challenging environment. We maintained our overall market presence while holding gross margins flat with last quarter. Demand for ATA hard drives in the March quarter remain depressed from year ago levels, falling 12% year-over-year and 9% sequentially to 103 million drives, due to the continuing effects of the worldwide economic downturn. This demand was slightly better than the 13% quarterly decline we had expected. WD took a disciplined approach to supply during the March quarter. We reduced production to match drive shipments, which were down by 8% year-over-year and 11% quarter-over-quarter to 31.6 million units. Additionally, we reduced finished goods by one million drives. We are encouraged by the supply demand dynamic in the industry and response to customers’ significant inventory reductions as they aligned with reduced demand levels, hard drive production was rapidly scaled back during the quarter. Manufacturers inventories exiting the quarter for both 3.5 inch and 2.5 inch ATA drives were just over one week, while component inventory and distribution was at the low end of the normal four to six week range. As we anticipated, the pace and timing of demand reductions and inventory realignment have been different for the 3.5 inch and 2.5 inch markets. The 3.5 inch market is approximately 50% distribution and the majority of OEM supply chains are short, which drives air freighted to system assembly sites in the region of sale. These supply chain characteristics lead to a very transparent and responsive market, which adjust rapidly to demand changes. In November and December, we saw this market undergo rapid demand decline, amplified by inventory adjustments in line with that demand change. The December quarter demand dropped by 8 million units or 12% quarter-over-quarter to 60 million units. We estimated that approximately half of this was inventory adjustment. March quarter, 3.5 inch ATA sales, were flat with the December quarter. Distribution inventory was maintained flat as sell-out equaled sell-in, while manufacturers inventory was reduced by about one million units to one and one quarter weeks. In contrast, the 2.5 inch market for hard drives is approximately 80% OEM with the majority using a China ODM assembly and ocean freight supply chain model. This, combined with the fact that this has historically been a high globe sector, meant that adjustments to the new market demand realities took somewhat longer to move through the chain. Starting in January, we saw a massive inventory squeeze, which took 10 million units out of the market demand in the first two months of the quarter. This reduced demand from 53 million units in the December quarter to 43 million units in the March quarter, a 7% year-on-year and 18% quarter-on-quarter reduction. Again, the industry was quick to react on the supply side. Matching output closely to demand and additionally reducing manufacturers inventory by over 3 million units to 1.1 weeks of supply. The industry built 12 million less 2.5 inch ata hard drives than in the prior quarter, a 20% quarter-on-quarter reduction in manufacturing activity. The balanced supply demand dynamic created in the quarter and the low level of inventory in both distribution and OEM channels are positives as we look forward into the June quarter; however, the most important determinant of our business performance in the quarter and into the second half of this year will be the true consumption trends. Significant uncertainty still remains about the magnitude of direction of end user demand. We will keep our operations highly flexible to respond to whatever direction demand will take, while remaining highly focused on inventory, cash, cost, and profitability. The actions we have taken and are taking to resize and structure the business to remain profitable and cash flow positive at a $1.5 billion dollar revenue level are well advanced and are already showing up in our cost of goods and operating expense lines. While very focused on the control of operating expense, we continue to make substantial investments in future technologies and products. Indeed, despite the constraints of the current economic cycle and our consequent restructuring actions, we increased our March quarter R&D spending, excluding variable compensation, by 6% compared with the same period last year. This investment was funded by reductions in base SG&A of 10% year-on-year. Complimenting our internal investments, we are continuing our strategy of utilizing external developed technology by strengthening our relationships with industry-leading suppliers. In April, we concluded a new agreement with Showa Denko, extending our long-time partnership with them as a strategic supplier of advanced media. Our sustained investment in technology and product breadth continues to bear fruit. With our shipments of the industry’s first two tiered drive growing throughout the quarter supporting multiple applications in our component and branded products business. This week, we announced an additional version of this two (tiered) drive for the high duty cycle, business critical enterprise market, again demonstrating WD’s ability to rapidly mature industry-leading technologies and mass production. We also extended our technology and product breadth during the quarter with the acquisition of Silicon Systems, which has become the WD solid state storage business unit with revenue in 2008 of $47 million and an established footprint in the industrial network communications, medical, aerospace, and military markets. The business is modestly accretive to WD. The addition of Silicon Systems’ technical expertise will accelerate WD’s solid state drive development programs as we assess opportunity in the net book, client, and enterprise markets providing greater choice for our customers to satisfy all their future storage requirements. Integration into WD is well underway and proceeding according to plan. Our overall results continue to demonstrate the effectiveness of the WD business model in all environments. Tim Leyden will now review these results for the March quarter in more detail and provide our outlook for the June quarter. Tim?

Thank you, John. During the March quarter, the WD team continued its disciplined approach to market participation. Having sized capacity to match our expectation of demand, we paid close attention to the fundamentals of cash generation and profitability in a challenging macro economic environment. We did this by optimizing product mix, limited our participation in certain markets and concentrating on cost reduction and factory utilization. We are pleased with the results of our actions to size the business to reflect demand realities that the industry faced and we sacrificed some near term share growth in order to make progress. We are monitoring the market size and the supply demand balance and we are poised and well positioned to leverage our asset philosophy model to take advantage of profitable growth opportunities as the industry continues to cope with unpredictable demand patterns. Our revenue for the third fiscal quarter $1.6 billion, down 21% from the prior year hard drive revenue of $2 billion dollars, and down 13% sequentially. Shipments totaled 31.6 million units, down 8% from the prior year and 11% sequentially. Average hard drive selling price was approximately $50, down $2 from the December quarter and $9 from the year-ago quarter. Our Q3 ASP reflects a continued competitive pricing environment, particularly in the notebook market, where supply exceeded demand in the early part of the quarter and in the branded products market, where price degradation continued throughout the quarter. Demand for our desktop products in the March quarter was stronger than historical season, resulting in increased volumes as compared to declines in all other markets. The strength in desktop was somewhat favorably impacted by replenishment of our customers’ inventories. As they had cut back orders significantly toward the end of the December quarter. This synonym was more pronounced and happened earlier in the desktop market than in other markets. WD’s flexible supply model allowed us to quickly respond to these changes in the overall demand profile. Demand for other products was affected most significantly by further inventory reductions driven by the overall weak consumer and commercial spending environment. Our unit shipments of 2.5-inch drives were 10.1 million in the March quarter as compared to 10.2 in the year ago quarter and 13.8 million in the December quarter. In this market, in particularly in the earlier part of the quarter, we were selective in the business that we chose to pursue. We shipped 3.5 million 3.5 drives for use in digital video recorders in the March quarter as compared to 3.1 in the year-ago quarter and 4.1 million in the December quarter. Revenue from sales of branded products was $343 million as compared to $330 million in the year ago quarter and $403 million in the December quarter. Industry pricing was particularly competitive in this market. We believe this was primarily driven by a large competitor liquidating excess inventory. With the industry’s leading cost structure and compelling product lineup, we continue to view this market as a key contributor to WD’s long-term profitable growth. Hard drive channel revenue was 48% OEM, 30% distribution and 22% branded products in the March quarter compared with 50%, 34% and 16% in the year ago quarter, and 57%, 21% and 22% in the December quarter respectively. The Q3 geographic split of our hard drive revenue was 26% Americas, 28% Europe and 46% Asia as compared to 28%, 31% and 41% in the year ago quarter and 23%, 29% and 48% in the December quarter. Demand strength in Asia, while more muted than in recent quarters due to the inventory correction in the 2.5 inch market, continues to be driven by the concentration of global manufacturing in that region and more recently by the affect of the Chinese government stimulus policy. Our gross margin for the quarter was 15.9% down from the 22.6% we reported in the year ago quarter and flat with the December quarter. Total operating expenses of $192 million included $14 million charge for in process R&D related to the Silicon Systems acquisition and $4 million of cost associated with the restructuring plan announced in the December quarter. Excluding these restructuring charges, total on R&D and SG&A was $174 million for the March quarter, $13 million higher than the total R&D and SG&A reported in the December quarter. December OpEx benefited from a $16 million reversal of a prior quarter bonus accrual and a zero bonus for the period, whereas the March quarter included a $14 million bonus accrual. Adjusting for these changes, the R&D and SG&A for the March quarter was down $17 million dollars from December. Restructuring charges related to the resizing plan we announced in December of 2008 have totaled $117 million to date, $4 million of which was incurred in the March quarter. We now expect the total cost of our restructuring to be about $122 million. This is lower than the $140 million forecasted on our January call. We continue to expect the annual savings of the restructuring to be approximately $150 million once all actions are completed, including the $14 million in process R&D charge and $4 million restructuring charge, operating income was $61 million or 3.8% of revenue. Excluding these charges, operating income on a non-GAAP basis was $79 million or 5% of revenue. Interest and other non-operating expenses were approximately $3 million. This includes about $1 million of unrealized losses on our previously disclosed investments in auction rate securities. These investments totaled $18 million at the end of the quarter. Tax expense for the March quarter was $8 million. For fiscal 2009, we expect our tax rate to range between 8% and 10% as we take into account our expected continuing profitability and the global mix of income by region. Our cash tax rate is expected to be between 2% and 3% for the fiscal year. Including the $14 million dollars in process R&D charge, and the $4 million restructuring charge, net income totaled $50 million, or $0.22 per share, excluding these charges, net income on a non-GAAP basis was$68 million or $0.30 per share. Turning to the balance sheet for the March quarter, our conversion cycle was 5 days, which consisted of 47 days of receivables outstanding 26 days of inventory or 14 turns and 68 days of payables. We generated $355 million in cash flow from operations. We paid out a net of $44 million related to the Silicon Systems acquisition. Capital expenditures were $106 million and depreciation and amortization expense totaled $119 million. Cash and cash equivalent increased by $203 million, ending at $1.6 billion dollars. In the June quarter, we will be paying out an additional $19 million related to the Silicon Systems acquisition, bringing the total net cash paid to $63 million. We will also be making our first quarterly debt repayment installment of $19 million. A summary of our debt repayment schedule was included in our most recent 10K filing. Capital expenditures for fiscal 2009 are expected to be about $500 million. This is consistent with the reduced forecast we provided on our January call. Depreciation and amortization for fiscal 2009 is expected to be about $480 million. We won’t be providing a fiscal 2010 capital forecast during our July earnings call. We did not repurchase any shares of stock during the March quarter. We continue to carry a healthy cash balance was we navigate the current economic downturn. We’ll continue to manage our cash conservatively until demand visibility becomes clearer and the economic uncertainty abates. Now I will discuss our expectations for the fourth quarter of our fiscal year 2009. You will recall that we indicated on several occasions that this quarter will be a 14-week quarter with our fiscal year ending on July 3, 2009. First, let me outline the market situation as we see it. Historically, the June quarter's sequential unit volume has been flat to slightly down. Global macroeconomic conditions remain challenging and while we have seen much progress toward inventory rationalization in the industry, we expect demand patterns to be less predictable than would be the case if normal seasonal conditions were present. Taking into account the inventory situation, our 14-week quarter and other known variables, we are modeling market volumes that will be essentially flat at the March quarter. We believe in a commodity market such as ours that balancing a supply and demand continues to be critical and we remain focused on maintaining that equilibrium. Our sequential ASP declines have been about 5% and we anticipate the pricing will continue to be competitive. The production realignment undertaken by the 3.5-inch industry participants has led to a better balance between supply, demand and inventory holding patterns and we are now seeing that dynamic extend to the 2.5-inch marketplace. Taking these factors into account, we expect current quarter revenue for WD to be in a range $1.45 billion to $1.6 billion. We are modeling gross margin of 15.4%. R&D and SG&A are expected to total approximately $175 million. This includes the combined incremental impact of OpEx spending related to our recent acquisition, as well as the 14th week in our current quarter. Restructuring costs are expected to be $5 million. Our net interest expense is projected to be about $4 million, assuming no further losses in our investments and securities. We anticipate tax expense of between $10 million. We anticipate our share count to be approximately $227 million. As a result, we expect GAAP EPS to be between $0.14 and $0.24. Excluding the $5 million of restructuring charges I outlined earlier, we estimate non-GAAP EPS of between $0.16 and $.26. This guidance excludes any impact from the possible disposal of our Sellawa facility. Operator, we are now ready to open the call for questions.

(Operator Instructions). Our first question comes from Sherri Scribner - Deutsche Bank Sherri Scribner - Deutsche Bank: Clearly this quarter you guys lost a little bit of share in 3.5 and 2.5 inch. What would be your plans going forward for share gains? Do you see a new pattern emerging where you want to be more cautious about share gains in your focus on profitability or do you still plan on additional share gains as we move through the year?

Our objective remains sustained profitable growth. Over the past five years or so, we’ve been putting together a broad product portfolio addressing multiple segments of the market. We have been successful in growing our position in each of those segments to a substantial level. Having achieved that balanced business portfolio, that affords us the ability tactically in any given quarter to be able to address market conditions by segment and manage the portfolio to achieve solid overall results. Where on an overall drive industry basis, we maintained share. We gained a little bit in desktop. We lost a bit in the 2.5 inch space. When I say we lost it, we know exactly where it is. We haven’t actually misplaced it. As we look forward into the market, we continue with our profitable sustainable growth, we will continue to pursue growth in our existing market segments as that offers us appropriate rewards and continue to grow in new segments as we’ve indicated an intention to enter the enterprise, mission critical space and with the recent acquisition of the solid state business unit. So you can expect that WD will continue to pursue sustained profitable growth. Sherri Scribner - Deutsche Bank: In terms of gross margin, I’m a little surprised that the gross margin guidance is down a bit. Is there anything particular we should think about there? Is that related to the 14-week quarter and do you see that as sort of a bottom for the gross margin?

When we look at the fourth quarter, generally it’s our most challenging quarter from a historical and seasonal viewpoint. In this quarter, we will incur 14 weeks of utilization and we won’t necessarily be able to have the sort of proportional increase due to the 14th week that we would normally anticipate.

Next question comes from David Bailey - Goldman Sachs David Bailey - Goldman Sachs: I was wondering if you could talk a little bit about your participation in the net book segment. I know last quarter you said you were sort of shying away from that and are you developing a cost optimized product for that segment?

I don’t recall indicating that we were shying away from net books. In fact we see the net book segment, which is one of the few areas in the computing and internet connected space and entertainment space that’s actually growing. We see it as a significant opportunity. We think last quarter there was about $5 and $6 million net books shipped and our participation in that market was similar to our participation in our traditional notebook environment. David Bailey - Goldman Sachs: Are your margins similar to the notebook margins as well?

Our margins are at the low end of our margin hierarchy, but low cost models we’re very well positioned in order to be able to participate in that and we’re satisfied with the margins that we’re getting in that segment.

Rich Kugele with Needham & Company, your line is open. Rich Kugele - Needham & Company: Can you give us a little color on the dynamics for gross margin improvement sequentially? Is it the effect of restructuring or do you have your own aerial density changes going on?

John indicated how we participated in the market by being tactically opportunistic and so from a mix viewpoint we benefited from that. Then we did benefit from the improvement in utilization as we had resized our business and of course we worked on cost like always do. Rich Kugele - Needham & Company: For the June quarter.

For the June quarter, we anticipate it to be the same thing as I indicated to Sherri. We won’t be able to get the same proportionality increase on 14 weeks from a revenue viewpoint. Production, we’re going to have to match production and cover the absorption for this proportionate overhead that’s going to go into the manufacturing overhead. Rich Kugele - Needham & Company: Significant capacity has been taken out of the drive industry. Is there anything that gives you pause, John, that that has perhaps been impaired due to the downturn?

I think the fundamental structure in the supply base is sound. We’ve certainly sized our business to the opportunities we currently see. Historically, if emerging opportunities showed up, we have a track record of being pretty good about addressing them. We do expect to see some spot shortages that, for instance, a number of wafer fabs in Asia today are running flat out and last quarter they were completely empty or significantly reduced. So there will be a little bit of jerkiness in the supply chain I expect over the next couple of quarters as people try to understand the macro environment and respond appropriately, but structurally and on a medium term basis, I don’t see any fundamental issues. Rich Kugele - Needham & Company: Inventory, have you started to see any rationality appear there at the OEM level? Are they starting to recognize that they aren’t going to get the type of ASP declines that they’ve gotten in recent quarters?

I think the OEM’s behavior is always rational. When the industry is foolish enough to produce significantly above demand, then pricing power moves to the large customers and they behave very rationally in that kind of environment. Job one for every procurement officer in every major company is availability. And so, in times when supply is short to demand, that becomes the major concern of the procurement department followed by good value for money.

Keith Bachman - Bank of Montreal, your line is open. Keith Bachman - Bank of Montreal: First, Tim, on the cost saves that you’ve identified, can you give us an update on timing?

We’re on track for the conclusion during the June quarter. Keith Bachman - Bank of Montreal: The distribution between cogs and OpEx in terms of that $150 million?

It’s about 60% OpEx and 40% cogs. Keith Bachman - Bank of Montreal: You mentioned that one of your competitors has been more competitive in the retail space or branded space. Has that impacted the margins of that particular business, which has been very profitable for you in particular, and how do you see that unfolding going forward?

I didn’t indicate that one competitor was more competitive; I indicated that one competitor we thought was carrying out an inventory. So consequently that I think hurt wealth creation for many of us in the industry, but from a viewpoint of branded products and margins, we’re now from a hierarchy viewpoint if we look at it with just knowledge to give insight but not to give too much away competitively. We have classified the margin hierarchy into three different stratifications. First stratification is the heavily engineered type products, which is the enterprise and the SSD type products and then the second stratification comes in the consumer type products. There’s a cover for inventory carrying and other administrative overhead type of costs. So we have the second highest margin there. The third one comes in the commercial type products, which is desktop and laptop and of course the net book. \

Christian Schwab - Craig-Hallum Capital, your line is open. Christian Schwab - Craig-Hallum Capital: Could you just remind me, Tim, what our gross margin target is?

The gross margin model, the long-term gross margin model is 18% to 23%. Christian Schwab - Craig-Hallum Capital: Can you elaborate what’s going on in the leadership position in the 2.5 inch, 250 per platter. Do you guys think you’re there first? Do you think a few others will be there around the same time?

Well clearly we led of the 250 gig per platter as we had done on the two previous generations. The next industry technology deployment will be 320 gig per platter in the 2.5 inch space and we fully expect to continue to be a leader in that space and we will on a broader context, you know, one of WD’s long-time’s strength has been our ability to manage the full portfolio of technologies within products and throughout our entire production chain, whether it’s our extended chain of merchant suppliers and our internal component factories as well as our drive factories, to manage our mix there to optimize our return on investment and maximize our margins and we continue to do that. Christian Schwab - Craig-Hallum Capital: On the hedge strategy, is that similar to previous strategies internal plus external?

Absolutely. We have for a long time had an approach to those technologies which we had internalized, media, of having a significant minority of that business on the outside in the merchant market. We worked very closely with those suppliers, TDK, SAE, on the head side, and the primary partner on the media side and we worked very diligently with them to assure our access to and utilization of technologies that they can bring to our ability to integrate those technologies and take them rapidly to market and by doing so, manage risk and new product introduction as well as manage total capital investments and total technology investments in our own business while getting majority of our components from our internal structure, which has lessened cost in the total package, we believe has been very successful and believe it will be continue to be successful for us. Christian Schwab - Craig-Hallum Capital: On the merger, do you think that leads to opportunities for you?

No deal is done ‘til it’s done, but for trying to predict the future, one tends to look at the past and certainly the last three mergers in the industry that included two parties with overlapping product lines resulted in opportunity for the non-merging companies in the industry. Christian Schwab - Craig-Hallum Capital: Suggest that that market share shift has already begun, do you agree with that?

I would agree with that, yes. Christian Schwab - Craig-Hallum Capital: As we look to another competitor, (our check) is going to suggest that they have limited exposure in a lot of desktops, particularly N.A. a little bit and Europe, but only we’re sitting around in Asia. Do you think anybody is changing their commitment to the industry, which could be a positive long-term fundamental?

It’s very hard to tell. The model that we have developed allows us to operate very profitably and very well in the overall market environment as it exists today. So we don’t rely on changes in the structure of the industry for our survival and overall future. So the industry doesn’t have to change to make us successful, but changes in the overall structure could potentially be of benefit not only to us, but to the entire industry.

Aaron Rakers – Stiffel Nicholas, your line is open. Aaron Rakers – Stiffel Nicholas: I want to understand the gross margin a little bit more. I think last quarter in reference to a question that was asked on the call, I think the comment was made that as the industry realigns itself and it looks like that definitely is taken shape, that you guys would be able to get back into your targeted gross margin level of 18% to 23%. So if you strip out the 14-week quarter, I guess I’m trying to understand why we wouldn’t be getting close to that 18% to 23% level again.

Well we sized the business to be profitable and cash flow positive at $1.5 billion dollars and obviously with the industry conditions being the way they were and that profitability, and we indicated it as well with our earnings expectation, was that it was just going to be right around break even. And so, as we go forward into the future and it will be very dependent on what conditions stay present in the industry, obviously we’ll have to grow a little bit from where we are at $1.5 billion. We probably have to grow somewhere to about halfway to what are previous revenue run rate was and then I think at that stage and with supply demand dynamics being somewhat in balance and our segment mixed in somewhat similar, then I think we can get to the low end of that 18% to 23% range under those conditions. Aaron Rakers – Stiffel Nicholas: So you’re saying relative to the $1.5, take a halfway point to the $2.2 that you’ve kind of done in recent history in terms of quarterly revenue?

Yes. Aaron Rakers – Stiffel Nicholas: And how much of an impact is the extra week in terms of the operating expense structure in this quarter and I’m trying to think about that giving the full extent of the cost savings as we roll into September and there forward.

Yes, I think it doesn’t compute to 14, 13, if you will, it probably computes more to like 13.75 in terms of what the OpEx run rate would be. Aaron Rakers – Stiffel Nicholas: Final questions for me. I want to make sure I have this clear. You’re saying that your tax expense will be $10 million dollars, is that right?

Yes. Aaron Rakers – Stiffel Nicholas: Okay, and then I guess I’m just trying to understand on the SSD, the Silicon Systems acquisition, understanding where they’re currently positioned, but can you speak to what addressable markets you really see in front of you for the SSD opportunity?

Sure. The SSD market, as we understand it in 2008, was about a $1.1 billion dollar market. That in context, our drive business in 2008 was a $35 billion dollar market. The projections that we’re synthesizing from all of the forecasters and from discussions internal and external show about a $5 billion dollar opportunity for SSD, three to four years out, and a $14 billion dollar opportunity for HDD, three to four years out. Within that, the $1.1 billion last year, about $400-$450 million of that was in bedded systems, which is in the markets that Silicon Systems addresses with current product line. We believe the balance was a split between enterprise tier-zero type applications and notebook and net book applications. We think most of the growth is in the forecasted growth. Most of that is in the enterprise and client computing and net book spaces.

Mark Moskowitz – JPMorgan, your line is open. Mark Moskowitz - JPMorgan: You mentioned, John, that you extended your relationship with Show Denko. Does that mean that you guys maybe overpay for Komag or do you see the potential still for Komag to help you with your potential mission critical enterprise entry in terms of aluminum discs?

No, I certainly don’t think we overpaid for Komag. I think our results over the time period since we bought Komag more than demonstrate the value of that acquisition to our business. The Showa Denko relationship, and in fact we also have relationships with other merchant market media suppliers, as well as sub straight suppliers, you know, are part of our long-term strategy of how we do internal/external blending to get the best technology, costs, quality, and risk profile for the business, and we’ve been consistent with that. We intend to continue to be consistent with that in mixing the majority, producing the majority of our internal heads in media, but buying a significant minority on a consistent basis over the long haul in the merchant marketplace. Mark Moskowitz - JPMorgan: Then as far as the earlier question regarding the proposed Fujitsu Toshiba merger, given Fujitsu’s kind of shall we say inconsistent execution within the mission critical enterprise, do you see this as really a prime opportunity for you to maybe accelerate your entry into mission critical or do you really see mission critical not being the top priority for WD in terms of growth?

Our approach to the enterprise business as we assessed the opportunity in that space for many years, that assessment did not look positive in that there were multiple form factors, multiple interfaces, very low volumes of all of them and relatively stable volumes of all of them and multi competitors, and that was not a good opportunity set from our perspective. To address that, the engineering effort relative to the potential sales just didn’t map out. Has the industry began to approach a series of transitions, 3.5 inch form factor to 2.5, studying cyber channel, then things began to look much different from our perspective with a segment of that mission critical market now standardizing on a 2.5 inch form factor with a sass interface, offering if you looked at that segment, which most forecasts indicate, will be by far the dominant sector over the next three years. That looks more attractive. And so, we began investing in enterprise engineering some years ago and we are preparing to address the needs in that market. Now an interesting opportunity emerges as the tiering in that marketplace for high i-ops, high transactions, begins to see the advantage of solid state solutions against the multi-drive de-stroked, 15 K fiber channel solution to that problem. We see the opportunity to provide value to customers in the high end of the enterprise tier to compliment a mid-range sass space product and thereby be able to satisfy the total range of solutions on a forward-looking basis over the next several years.

Scott Craig - Banc of America/Merrill Lynch, your line is open. Scott Craig - Banc of America/Merrill Lynch: Can you guys comment on the impact that the bonus accruals will have in the coming quarter on the operating expense line. Secondly, how much cash did you actually had been taken out of the industry either in units or percentage when you think about both the 3.5 inch and the 2.5 inch based on your conversations with the industry?

Well on the bonus question, the accrual that we made this quarter is pretty typical, somewhere between $14-$20 million, actually between $10 and $20 million dollars, depending on how well the company is doing in absolute terms and relative to peers. The second piece of question, capacity in the industry. I think what’s much more important than capacity in the industry is utilization of that capacity and how people are running production relative to overall demand and I think there’s some very positive signs there. I think the industry was tremendously responsive and fast in the last quarter and very disciplined in managing supply relative to demand. I think the fact that over the last two quarters, our customers have taken about 10 million units out of inventory is another very positive sign, because when we’re trying to understand the macro economic impacts and trying to understand the real end user demand activity in the market, eliminating that 10 million of disconnect between what’s happening on the end customer side and what’s happening on the supply side is very important to getting a good match between supply and demand. So I’m very encouraged by all the behaviors I see and the fact that the inventory is not clouding the issue anymore. So now it becomes, the uncertainty is now around a true end demand and what the impacts of the macro economic environment are going to be on consumers and commercial demand.

Next question comes from Katie Huberty - Morgan Stanley. Katie Huberty - Morgan Stanley: What was the headcount growth year-on-year if you net out acquisitions and how do you expect headcount to trend over the next couple of quarters?

I don’t have the netting out the acquisitions necessarily closely to hand, but I certainly on a full year-over-year basis, we’ve grown about 2,000 people. On a sequential basis, we’ve come down 7,000 people from the December quarter. Katie Huberty - Morgan Stanley: Is there more work you can do on that front the next couple of quarters?

We don’t have any substantial plans in that area. We’re pretty much done, with the exception of our facility where Tim mentioned we continue to operate that facility as we continue to explore closure or disposal. In either event, our headcount will come down by about 500-600 people at that point. Katie Huberty - Morgan Stanley: A quick follow-up, as it relates to the Silicon Systems acquisition, do you plan to add or integrate any of your own technology to their current solution or do you view that as largely a standalone business as you purchased it?

There are multiple facets to it. It is a revenue generator, a profitable business, that we will continue to pursue and we’d like to grow our presence in those markets, which we don’t currently. We didn’t previously as WD, but there’s also significant value from an engineering expertise and experienced perspective that we expect will have a positive effect when combined with our existing internal resources. I should clarify. We have grown by about 2,000 people on a year-over-year basis, but that does include the conversion of about 4,000 contract employees into full-time employees. So we’re on a real apples for apples basis. We’re down about 2,000 people on a year-over-year basis.

Doug Reid - Thomas Weisel Partners, your line is open. Doug Reid - Thomas Weisel Partners: Can you comment on which segments WD chose to step away from in order to maintain supply demand balance and what’s driving those decisions?

Well I think the areas that we stepped away from a little bit, in 2.5 inch, we stepped back somewhat. We didn’t like the reward ratio in that business at the beginning of last quarter. So we stepped a little away from that. We stepped into the 3.5 inch space, which was offering better reward for our energy at that time. We also created some space in the branded products arena to allow what we saw as a required blowout of excess inventory. Doug Reid - Thomas Weisel Partners: Can you comment on the opportunity to gain market share at the next technology 320 gig per platter?

That’s the next technology and we’ll announce products when we’re shipping them. Doug Reid - Thomas Weisel Partners: Thank you.

Okay, I think we’re done with questions. So in closing, I want to thank the entire WD team with strong results in such a challenging market condition are a testament to their adaptability, their perseverance, the capability and focus and motivation. Despite the current state of the economy. We remain very encouraged by our long-term market opportunities. The applications driving digital content continue to multiply. Drive storage, delivering appropriately tiered, cost effective, high capacity storage, and high performance, low capacity transaction oriented solutions, will continue to provide great customer value in these markets and we remain committed to provide the best customer value proposition in the industry to deliver financial results, which allow us to continue making the substantial investments required to lead the industry and to generate superior returns for our supply partners, our employees, the communities in which we operate, and our shareholders. Thank you again for joining us today and I look forward to keeping you informed of our progress.