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

Thank you. I want to mention that we will be making forward-looking statements in our comments and in response to your questions concerning: our financial and operational performance; our business model, cost structure and customer satisfaction; demand, growth, pricing and inventory in the hard drive industry; our expectations for the September quarter; our growth opportunities, new product designs and our execution capabilities; our expectations regarding our WD VelociRaptor products and GreenPower technology; our investments in technology, capacity and infrastructure; our aspirations to serve every mass storage market segment; the efficiencies of our in-house hard drive controller design and development and how it will enhance the efficiencies of our development process with our existing SOC supply partners; the cost benefits of the integration of our media operations; our effective tax rate; repurchases of our stock; our cash conversion cycle; and our financial outlook for the September quarter and the second-half of calendar year 2008. 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 May 6, 2008, as well as the additional risk factors reported in the press release included as Exhibit 99.1 to the Form 10-K we furnished to the SEC today. We undertake no obligation to update our forward-looking statements to reflect new information or events, and you should not assume later in the quarter that the comments that we make today are still valid. I also want to note that copies of remarks by WD executive John Coyne and Tim Leyden from today’s call will be available on the investor section of Western Digital’s website immediately following the conclusion of this call. I’d now like to turn the call over to John Coyne, Chief Executive Officer of Western Digital.

Thanks, Bob. Good afternoon and thank you for joining CFO Tim Leyden and myself today. Following my remarks, Tim will review our financial performance in fiscal year 2008 and our fourth quarter, and provide our outlook for the September quarter. Fiscal ‘08 was an outstanding year for WD, capped off with a solid fourth quarter financial performance reported earlier today. For the year, we grew revenue 48% and earnings 54%, delivering on our primary goal of profitable growth. We generated $1.5 billion in cash from operations during the year. We also successfully concluded our $1 billion acquisition of Komag and have completed the integration of the new media operation and are already generating solid technology and cost contributions to the overall business. Our fiscal ‘08 performance provides further evidence of disciplined operational and financial performance and the continued scalability and execution excellence of the WD team. Customer satisfaction with WD’s broad product line, high quality and reliability, service excellence, and overall value proposition continues to drive our business growth. We are very pleased with the continued, consistent performance of the efficient business model that we have built and refined over the last several years. While maintaining focus in the high-volume desktop segment, we have made major strides in diversifying the business by establishing our footprint in newer, faster-growth markets such as the 2.5-inch notebook drives, branded products, consumer electronics, and SATA drives for the enterprise. As a result of this activity in higher-growth areas, we saw our hard-drive revenues from non-desktop markets expand to 56% of revenue in fiscal ‘08, compared with 43% in fiscal ‘07 and 29% in fiscal ’06, and we exit the year with 63% of Q4 revenues derived from non-desktop, higher-growth applications. It is worth noting that in the June quarter, WD was less reliant on…

Thank you, John. Our fiscal 2008 and June quarter results demonstrate continued strong execution by the WD team. During the year, we improved and refined the basic WD business model in which we profitably satisfy our customers’ demands by efficiently providing a broad range of quality products at competitive costs. In the seasonally softer June quarter, our results reflect our capability to thrive in a very competitive pricing environment. The growing segment and geographical diversification of our business provided us with the basis to generate strong results, despite the impact of the excess inventory which was carried into the quarter by our competition. This diversification resulted in continued strong revenue growth, operational results that delivered 630 basis points of gross margin improvement over the same quarter last year, and earnings that exceeded expectations. For our full fiscal year 2008, total revenue was $8.1 billion, hard drive shipments were 133 million units, and hard-drive ASP was $59. The corresponding numbers in fiscal ‘07 were $5.5 billion, 96.5 million units and $57, respectively. Gross margin in ‘08 was 21.5% versus 16.5% in ‘07. Operating income for ‘08 was $1 billion versus $415 million in ’07, and net income for ‘08 was $867 million versus $564 million in ‘07. Fiscal ‘08 EPS was $3.84 versus $2.50 in ‘07. Net income in ‘08 included the impact of $75 million of tax charges related to the license of intellectual property to subsidiaries, and $49 million of acquired in-process R&D expenses, whereas ‘07’s net income included a favorable tax adjustment of $126 million related to the valuation of our deferred tax assets. Turning to the fourth quarter results, revenue was $2 billion, up 46% from the prior year, and hard drive shipments totaled 35.2 million units, up 41% from the prior year period. Average hard drive…

(Operator Instructions) Our first question comes from Rich Kugele with Needham & Company. Richard Kugele - Needham & Company: Thank you. A few questions, I guess first, can you give us a sense on Komag’s contribution in the fiscal fourth quarter, both from a margin and a revenue perspective and whether or not you think as you move forward, you’ll continue to see some further synergies from Komag?

Komag, Rich, we got 80 basis points in the December quarter, a further 40 basis points in the March quarter, and an additional 80 basis points in the June quarter, so we are at a cumulative 200 basis points of increased gross margin, or reduced cost, is a better way to put it, as we stand at this point. We are still on track and expect to reach full cost benefit by the end of December of this year and we expect that to happen pretty much linearly between now and then. Richard Kugele - Needham & Company: So that means 100 basis points at least in the 19.3 is coming from Komag. I guess that begs the question, how much of the business do you normally walk into at the beginning of a quarter through auctions with OEMs? And does that really vary by desktop versus notebook?

I think first, the 100 basis points is spread over the next two quarters in terms of contribution from the Komag cost improvement. And the -- typically the vast bulk of our OEM business is decided before we exit the prior quarter. Richard Kugele - Needham & Company: Okay, so the opportunity for upside to your gross margin guidance then has to largely occur within the channel, and so if channel prices are less aggressive than what you are at least anticipating in your guidance, then that would represent the opportunity for upside, plus mix, I guess?

We’re running the business the way we run the business. Richard Kugele - Needham & Company: Okay, and just lastly on your new enterprise announcement, how much of the market do you think, since it is a new drive, can really be addressed by this 2.5-inch 10K product, which I think most vendors have largely shied away from? And then moving that, if you wanted to migrate that 2.5-inch SAS product, how much engineering and time would that take?

I think the good news is that there’s a significant infrastructure now in place, and continuing for 2.5-inch form factor in both the blade server and storage markets. And our desire would be to see similar adoption of SATA in that space that we’ve seen over the past four or five years in the 3.5-inch space, so that’s item one. To your second question, I think the engineering investment in mainstream enterprise is significant, both in terms of development and support, once serving that market. And as we’ve said, our long-term guidance in the 8% to 10% OpEx range adequately covers what we believe is necessary to participate in that market. Richard Kugele - Needham & Company: Okay. Thank you very much.

Keith Bachmann with Bank of Montreal, your line is open.

Thank you. I wanted to ask you about mix, both in Q4 and then embedded in your guidance in Q1. This quarter you had a much higher percent of OEM versus disti and retail, and I just want to try to understand how that mix in particular is incorporated within your guidance -- does the mix stay the same? I assume that disti would tick up as a percent, but I just wanted to get a little color on that, and then I have a follow-up, please.

As John indicated, we navigated pretty much away from the distribution in order to have a different channel mix, the different segment mix in Q4, and got the benefit of that. As we go into Q1, again the starting point of the pricing has pretty much been set, so we will have an impact on the OEM pricing, as John also indicated. And we expect to have a 2.5 -- with the 2.5 at this stage, 2.5-inch, we’re seeing that most suppliers at this stage have the capability to provide a broad mix. And so consequently, I think that our mix in Q109 will resemble the broader market, whereas we’ve had a competitively advantaged view of that for the last few quarters.

So Tim, just to push you a little bit, does that mean that disti goes up as a percent of your total units in Q1?

The other thing in relation to that to recognize is that while the desktop disti market if a 50-50 disti and OEM market, the 2.5-inch space is more like 80-20 OEM -- 80% OEM, 20% disti, so our success in the 2.5-inch space in and of itself dilutes our overall distribution content in our business.

But I was thinking, John, if more people are participating in the 2.5-inch space that might suggest that your disti content would actually go up this quarter.

Not necessarily.

Okay, well, I’ll leave it but then the second question is I just wanted to get some thoughts -- your weighted average price this quarter was $56. Does that go up, down, or flat you think in the September quarter?

If we look at historical norms, generally it stays about flat or maybe slightly up.

Okay. Thank you very much.

Mark Miller with Brean Murray. Mark Miller - Brean Murray, Carret & Co.: I was wondering if you could comment -- we’ve seen some data in the channel where we are seeing additional pricing pressure, some added rebates from one of your competitors. Are you seeing any worsening of the channel since the quarter began in terms of pricing?

I think nothing unseasonal; I mean, recognize that we came in at a pretty low point and expectations I think were not there that the inventory had actually been worked off during last quarter. I think there was a -- despite the data to the contrary, I think there was an expectation that the -- there was more product around than there needed to be, and so turning that perception around has taken a little bit of time. Mark Miller - Brean Murray, Carret & Co.: One of your competitors for the first time has indicated, apparently the first time in 10 years indicated the possible intention of buying significant [inaudible] from one of your suppliers, TDK. I realize that’s later this year. Do you anticipate that will have any affect on your in terms of pricing or supply?

No, I don’t. We’ve had a very consistent approach to sourcing in the open market since we acquired our internal head capability. We’ve had a very long relationship with TDK SAE, a very positive relationship. They are a great supplier. We believe they perceive us as a great customer and we expect to continue to advantage each other as we move forward. Mark Miller - Brean Murray, Carret & Co.: Finally, any changes in the percent of heads that you are buying from outside in the June quarter over previous quarters? Has that stayed the same, gone up, gone down?

Pretty much the same. Mark Miller - Brean Murray, Carret & Co.: Thank you.

Richard Kaiser with Sanford Bernstein.

Could you just talk about how you are seeing development of solid state drives into 2009? Is that primarily still a high-end product? It seems that there are a number of NetBooks that are looking, or incorporating solid states. Can you just give us some idea of how you are perceiving that and its development now?

Sure. I think we’re looking at it in three distinct market applications for SSDs, the first of those being in the high-end enterprise, which is an [inaudible] requirement, a performance requirement, not really a large storage requirement. And so we’ve seen announcements in that space. We believe that there’s some compelling value being offered there and there certainly seems to be an economic case, as well as a technical case for deployment of SSDs into that kind of environment. The second area where SSDs have probably been most heavily marketed and have been lightly distributed is in the high style notebook arena -- full featured, full sized notebook, things like the Macbook Air and several announcements from most of the PC notebook manufacturers. In that space, we believe that the customer experience, those few customers who actually have one, that the customer experience has been essentially negative, relative to the overhyped benefits. And that that potentially puts back -- that and the cost put back the adoption rate probably by 12 months against current forecasts. And then the third area of application has been in the ultra-mobile PC, or the SUSE EPC type market, which is a market focused on meeting price point and providing a level of functionality at a price point. What we are seeing there is the first generation of those devices, essentially they were with four, eight, 12-gigabytes of Flash memory, and what we are seeing in this year’s announcements over the last couple of months of the second generation is that that market seems to be bifurcating to on the low end, $399 type price point, a 7-inch screen with a 12-gig of SSD and probably a Linux operating system. And then a more functional, more feature, richer machine at somewhere in the $400 pricing point, which is going to a 10-inch screen, operating an XP-based system, and incorporating a 2.5-inch hard drive. So that’s kind of how we are seeing that shaking out. And it looks like the low-end machine is beginning to develop some penetration in completely new markets that have lower disposable income levels than the markets currently being served by the entire PC portfolio, and we are seeing the higher featured machine targeted as incremental sales into developed markets, where a second PC or a third PC is being bought in that fashion.

That’s very helpful. Thank you. Could you just perhaps give an estimate of what you though SSD share was in 2008 calendar, or where you think it will be in calendar 2008 and then calendar 2009, just approximately?

It’s really hard. I don’t think it gets into more than one decimal place.

Okay. Great, thank you very much.

Mark Moskowitz with J.P. Morgan.

Thank you. Good afternoon. A couple of questions, gentlemen; I want to first get back to the rank and file, if you could, in terms of the swing factors for your outlook. Getting back to Mr. Bachmann’s question as far as the OEM mix, can you kind of rank order how much is OEM mix versus maybe potential share loss, as manufacturing parity does increase in terms of your competitors now able to execute? And then thirdly, just general pricing dynamics.

On the pricing dynamics, and I’ll leave the other part or portion of the question to John, but on the pricing dynamics, we are modeling towards the higher end of what would be the historical norm, so that’s what we see out in the marketplace.

We’re not modeling share loss. We’re modeling that our mix, which has been very rich, from the beginning of last fiscal year and getting a little lighter each quarter as we move through the year, our mix becomes to look much like the market demand, and that’s driven by two dimensions. One is that our growth has basically meant that we need to service a market lookalike demand because of our size at each account, and the other piece of that is that as our competitors have gradually come up with the ability to ship the full range of capacities, that provides more choice to our customers also.

Okay. Thank you on that part. And then, have you ever given us any context around the notebook class drive shipments that WD exhibits each quarter in terms of how much is going into an actual PC versus external back-up? When you guys say you are shipping notebook, is that all for notebook PCs or is that for other as well?

It’s for all 2.5-inch shipments, the 11.7 million is our total 2.5-inch shipments. Some of that went into notebook PCs, some of it went into external storage solutions built by others, and some of it went into our own branded products. We don’t break it out.

You don’t break it out. Is it fair to say that that piece though, the notebook class is higher than your overall branded business, in terms of 2.5-inch versus 3.5-inch shipping into the retail market?

I’m not sure I’m getting the question right. Certainly our shipments into notebook computers are significantly larger than the shipments into the external attached marketplace.

Okay. And then if we could shift gears, John, could you maybe talk a little about your new product tone in terms of -- obviously you said you won’t pre-announce products until you actually start shipping, but your tone seems to be a little more constructive, I think ever since November of ’06 when you first started talking about the enterprise as a potential market. Can you maybe just talk about what’s changed and should we expect more announcements in the coming months ahead?

Well, absolutely. I mean, I certainly hope we’ll be making lots of announcements over the course of the next year in order to maintain our current position in the marketplace and actually improve it, so yes, you may expect a significant stream of product announcements over time.

I’m talking about new market entry though in terms of markets you are not currently serving, I’m sorry.

You’ll just have to watch the specific product announcements.

Okay, and then maybe you can talk a little more about the ST Micro IP and the team. Can you talk about what that can mean for the model, what that can mean for some of your design or new product development down the road?

Certainly. As you’ve seen over the past five years, as we’ve grown the company and grown the financial resources of the company, we have also in parallel been gathering in the fundamental technology capability to drive the business forward and to improve the fundamental efficiency from an engineering perspective. When you own all of the technology pieces, you can better and more efficiently and more timely put together the optimization of the system, and so we did that with Hedge, we did it with Media, and we’ve now brought HDC controller design and development back into the company again. We’ve had it outside for maybe eight years, I guess, something in that range. So we brought that capability back in house and the objective there is to improve the efficiency so that the HDC core, just like all of our competitors have their own HDC capability, we now have that and therefore all of the firmware that we write to operate that core can now be common across our multiple drive platforms, and can be -- we’ll continue to then embed that technology in the SOCs, paired up with the best channel and the best execution with our existing SOC suppliers. So it helps us on efficiency and it helps us on speed.

Okay, thank you. If I could just squeeze one more in --

Next question, Mark. We’ll come back.

Steven Fox with Merrill Lynch.

Good afternoon. Just getting back to the revenue guidance and maybe as you look out into the rest of the fiscal year, it sounds like you are not seeing any kind of slowdown in demand from any of the end markets. Is that true? And if there’s any acceleration or anything else that’s going on, could you talk about how you view the end markets, given you have another three months to look at the economy?

We are seeing all the commentaries like everybody else is seeing from the reporting companies, talking about headwinds and we’re watching very closely in order to see whether there is anything that would be significantly or statistically significantly different from what we would term normal seasonal patterns. And at this point, there isn’t anything that we are seeing. We are seeing normal seasonal patterns. Having said that, the WD business model is very well-positioned to deal with anything that appears on the macro level because with our focus on asset velocity and our focus on low cost, we are well-positioned to be able to change and adapt, shift focus if we see anything happening. We watch the demand very closely and we are -- but there isn’t anything that we are seeing so far.

Okay. And then just on pricing, your comments tend to lead us to believe that once you get this hangover in the September quarter from pricing pressures, that the December quarter may look fairly normal off of whatever base we’re in September. What’s the risk that I guess pricing stays tough as you look out beyond this quarter?

Given the normal seasonal accommodations and the expected back-to-school season and the seasonally strong Christmas season, and of course always with the caveat of competitive behavior, we would see that once the inventory overhang is gone that we would get back to fairly normal conditions and be able to have a typical upswing in the back half of the year.

And to that point, we saw very disciplined industry production rates last quarter. We were surprised and I believe the industry overall would express surprise with how rapidly the inventory overhang was worked off by moderation of production capacity, and so I think that’s a very, very positive sign for the industry. We’ve just got to see the seasonal demand roll in and maintain that discipline into this quarter, and I think your proposition as you opened your questions that things could get a lot better in the December quarter is pretty sound.

Okay. Thank you very much.

David Bailey with Goldman Sachs.

Thank you very much. Your branded business continues to show strong growth, despite some slowing on the consumer side. Can you help us understand how you are maintaining those rates? Is it share gains or retail expansion?

All of the above. I mean, the fundamental is that we have really cool products that are really easy to understand and easy to use, and that we have great channel partnerships, and that we continue to expand our reach, particularly in Europe and in Asia-Pacific and other developing economies. I mean, we are very, very well-penetrated in the U.S. market but we have lots of growth opportunity in emerging markets.

Thank you.

Sherri Scribner with Deutsche Bank.

Thank you. I heard a lot of commentary about the desktop market and I apologize if you already comment on this, but can you give us some commentary about what’s going on in the notebook market in terms of pricing? Is it as bad as the desktop market, or is it a little bit better?

Notebook is pretty much running to our expectation. It is exhibiting the characteristics of a six supplier market with all six suppliers having capability to address virtually every segment of the market.

Okay, and then in terms of the CapEx guidance, it looks like CapEx is going up about 30% year over year. It’s a little bit more than I would have expected. Can you maybe help us understand why that’s going up 30%?

We had anticipated that we would spend a little bit more during the course of 2008, but as we manage our CapEx to a just-in-time capability, we’ve pushed more out into 2009 and that includes our wafer fab conversion, which you’ll notice that we had anticipated that there was going to be a $200 million expenditure in that in the course of 2008 and we actually came in at about 120, I believe. And in 2009, we were going to have $100 million and the slowdown that we had in 2008 is actually spilling over into 2009, which is responsible for most of the up-tick.

Okay, and then I just have a quick question on the bringing in of the controller design technology -- does that allow you to design a controller for a solid state drive or is that only going to allow you access to design for the HDD controllers?

We will have the capability to design a controller for any media and any interface.

Okay. Thank you.

Christian Schwab with Craig-Hallum Capital Group.

Thank you. Just on the -- a follow-up again on the controller question; are you ultimately trying to bring the design of your system on-chip controller entirely in-house?

Controller portion, yes.

Perfect. And then, if one wanted to be an optimist, if possible, the good news that you highlight is that production and inventory are at last in check. Seagate obviously flushed through their entire inventory by getting their builds wrong. The rest of the industry behaved the best they could and watched them sell all those drives. The good news is that perhaps if seasonality and demand continues in the December quarter, that gross margins could improve.

Yeah, I mean, that’s what the expectation would be if we get back to -- if we get back to a normal back-to-school season and normal demand patterns in the Christmas quarter, yes. And with the inventory overhang gone, yes, there should be an improvement in margins.

Which would be extremely good, given that current margins that we are forecasting are already higher than last year.

Right, exactly. Thank you.

Matt [Nahorski] with Wachovia.

Just a couple of quick questions about headcount; number one, can you just talk about where you added headcount in the quarter and what your thoughts are around headcount throughout fiscal ’09? Thanks.

You’ll see headcount increase substantially in the quarterly report, up to 50,000 from about 42. That’s really a factor of a decision that we made in Thailand to convert a large number of contract workers to full-time WD direct employees. Outside of that reclassification, and that brought them into the WD employee report, outside of that reclassification, our hiring was pretty normal, targeting support of our growth as well as specific investments in engineering and other parts of the support structure of the business to drive our future.

Our last question comes from Scott Craig with Banc of America.

Thanks. Good afternoon. Just quickly on the CapEx side of things; if I strip out the wafer expenditures, the CapEx is still going to be up around 30% year over year in fiscal 2009, so can you maybe discuss where the CapEx is going to be spent, in particular focusing on how much capacity, perhaps in percentage or in units that you think that you could add?

Our component expenditure and our media expenditure together accounts for close to two-thirds of the total CapEx expenditure. And then, in addition to that we have to deal with the mix of test, as the mix gets larger, the -- we have to spend more time on test and therefore more capital expenditure. So the remainder is in the back-end, which is assembly test and R&D type expenditure.

Okay, so you don’t have any rough estimate on how much you’ll think you’ll increase the unit capacity capabilities in 2009? And is there any -- how does the linearity of the expenditures occur over the course of the year? How much flexibility do you have there?

What we’ve been spending in normal business situation, other than the increment that we are spending for the wafer fab conversion, for several years it was at 6% of revenue, and then with media, added about another percent. So consequently, from a modeling viewpoint, a good model to use excluding the increment for wafer conversion, wafer fab conversion is in the 7% range or so.

Okay, and if I could just ask one more -- there was a couple of times on the call where you mentioned that you felt that the competitors were capable of providing all products across all the ranges for 2.5 and 3.5-inch, but it’s been clear that you guys have had a nice technological lead in the 2.5-inch notebook space, so can you describe the competitive dynamics there, whether you still think you have a lead, how far that lead is, and how long you think it will last, the gap between yourselves and competitors?

Of course, it will be our endeavor to maintain it forever. I think we are still advantaged somewhat in the sense that we’ve built the franchise over the last year and we will certainly endeavor to maintain that. And we’ll make product announcements as we ship product.

Do you feel the competition is closing that gap at all, or will close it in the back part of calendar 2008?

I think we’ll have to wait and see who ships what when, and then we’ll know. We don’t pay much attention to announcements of future intent. We focus more on what actually gets done.

All right, thanks.

So in closing, I would like to thank you again for joining us. We are very encouraged by the overall market opportunities for WD growth in the hard drive markets in the years ahead and I look forward to keeping you informed of our progress. Thank you.

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