Driving Shareholder Value

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Driving Shareholder Value

Business Model and Capital Allocation Strategy

CFO, Western Digital September 13, 2012

Wolfgang Nickl

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Forward-Looking Statements

SAFE HARBOR

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning our expected financial results, our business model and financial goals and our capital allocation strategy. 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 from those expressed or implied in the forward-looking statements, including the impact of continued uncertainty and volatility in global economic conditions; supply and demand conditions in the hard drive industry; uncertainties concerning the availability and cost of commodity materials and specialized product components; actions by competitors; unexpected advances in competing technologies; uncertainties related to the development and introduction of products based on new technologies and expansion into new data storage markets; business conditions and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; and compliance with regulatory conditions imposed on us by the Chinese Ministry of Commerce. More information about the other risks and uncertainties that could affect our business are listed in our filings with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at www.sec.gov, including our Annual Report on Form 10-K filed with the SEC on August 17, 2012, to which your attention is directed.

In addition, our long-term financial goals included in this presentation are based upon a variety of estimates and assumptions which may not be realized and, in addition to the risks identified above, are inherently subject to

business, economic, competitive, industry, regulatory, market and financial uncertainties, many of which are beyond our control. There can be no assurance that the assumptions made in preparing our long-term financial goals will prove accurate or will be achieved. The assumptions our management used as a basis for the long-term financial goals are not facts and should not be relied upon as being necessarily indicative of future results, and investors are cautioned not to place undue reliance on the these long-term financial goals.

The forward-looking statements, including the long-term financial goals included in this presentation, speak only as of the date hereof. We do not intend, and we undertake no duty, to update these forward-looking statements to reflect subsequent events or circumstances; however, we may update our business outlook or long-term financial goals or any portion thereof at any time in our discretion.

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Non-GAAP Financial Measures

SAFE HARBOR

This presentation also includes the following financial measures that are not defined in accordance with U.S. generally accepted accounting principles: non-GAAP earnings per share and free cash flow.

Non-GAAP earnings per share is a non-GAAP financial measure defined as earnings per share before any unusual or non-recurring charges or any tax impact related to those charges. The non-GAAP earnings per share information included in this presentation is provided on a forward-looking basis and excludes certain items such as amortization of intangibles and the diluted impact of sales of drives to Toshiba in connection with our divestiture transaction. Because we cannot forecast these items with certainty or accuracy based on information known to us at this time, we are

unable to provide a reconciliation to the most directly comparable GAAP financial measure. The impact of these excluded items may cause non-GAAP earnings per share to differ materially from earnings per share calculated in accordance with GAAP.

Free cash flow is a non-GAAP financial measure defined as cash flows from operations less capital expenditures. We consider free cash flow to be useful as an indicator of our overall liquidity, as the amount of free cash flow generated in any period is representative of cash that is available for strategic opportunities including, among others, investing in the Company's business, making strategic acquisitions, strengthening the balance sheet, repaying debt and

repurchasing stock. We also believe that free cash flow is one of several benchmarks used by investors for

comparison of our liquidity with other companies in our industry, although our measure of free cash flow may not be directly comparable to similar measures reported by other companies. Free cash flow should not be construed as an alternative to cash flows from operations or other cash flow measurements determined in accordance with GAAP.

A reconciliation of free cash flow as provided in this presentation on a historical basis to cash flows from operations, the most directly comparable GAAP financial measure, is included in the slide captioned “Appendix.” Our long-term financial goals for free cash flow are presented on a forward-looking basis and exclude estimates for capital

expenditures. Because we cannot forecast this measure with certainty or accuracy based on information known to us at this time, we are unable to provide a reconciliation to the most directly comparable GAAP financial measure. The impact of excluding this item may cause free cash flow to differ materially from cash flows from operations calculated in accordance with GAAP.

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Topics

AGENDA

10 years of profitable growth FY 13 forecast

ROIC management Economic profit levers New business model

1 2 3 4 5

Capital allocation strategy

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0 5 10 15 20 25 30 35

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FCF in $M

GM%

Cost Leadership + Diversification +

Strategic Acquisitions = Profitable Growth

10 YEAR HISTORY

35%

30%

25%

20%

15%

10%

5%

0%

Free Cash Flow in $M Gross Margin

Note: FY12 excludes the effect to free cash flow of the $585M of assumed debt as a result of the HGST acquisition on March 8, 2012.

Free cash flow is a non-GAAP financial measure defined as cash flow s from operations less capital expenditures. A reconciliation of cash flow from operations to free cash flow s for the periods presented is set forth in the Appendix

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Quality + Portfolio = Customer Preference

Business Segment Trends

0 10 20 30 40 50 60 70

CE Desktop Notebook Branded Enterprise

0 10 20 30 40 50 60 70

CE Desktop Notebook Branded Enterprise

Western Digital Rest of Market

27%

28%

56%

46%

42%

44%

45%

F1Q03 Units (M) F4Q12 Units (M)

TAM = 53 TAM = 157

WDC share = 16% WDC share = 45%

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Strategy Resulted in 25% CAGR in WDC Stock

SHAREHOLDER RETURN

Source: Yahoo! Finance (200)

0 200 400 600 800 1,000 1,200

WDC S&P 500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

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$10 Non GAAP EPS

FY13 FORECAST

Investments: Thin and light, Cloud, SSD, Connected Life

Cost opportunities: Sourcing, utilization, freight, areal density deployment

Capital investments focused on:

Technology and flexibility Capital allocation strategy Key Initiatives

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

FY2012 Vol&Mix Cost Price Opex Financial FY2013

$8.61

$10.00

Non-GAAP EPS is a non-GAAP financial measure defined as EPS before any unusual or non-recurring charges or any tax impact related to those charges. Because we cannot forecast these items with certainty or accuracy based on information known to us at this time, we are unable to provide a reconciliation to the most directly comparable GAAP financial measure. The impact of these excluded items may cause non-GAAP earnings per share to differ materially from earnings per share calculated in accordance with GAAP.

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0%

5%

10%

15%

20%

25%

30%

35%

40%

Key Financial Driver of Business Model

ROIC MANAGEMENT

Operating Margin

Hurdle rate 20%

WACC 11%

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0

Invested Capital Turns

Economic profit when expressed in $ terms

Semiconductor

WDC

Distribution

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Basis for Value Based Management

ECONOMIC PROFIT LEVERS

Customer delight

Product innovation (7-platter, Hybrid, 5 mm, …) Volume price mix

Adjacent businesses (SSD, Connected Life, …) Recovery from the flood (component mix,

utilization, freight, AD deployment) Focus on quality

Future efficiency potential Focus on variability of model Target utilization: 90% – 95%

Optimal level of automation

Industry leading productivity metrics Cash conversion cycle

Distribution of excess cash Leverage

NOPAT

Charge for Invested

Capital Economic

Profit

WACC Working

Capital Fixed Capital

COGS Revenue

OPEX

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Significant Opportunity

BUSINESS MODEL

Pre-Acquisition New Model Comments Gross Margin

(% of revenue) 18% - 23% 27% - 32% Varies by business unit New businesses alter model OPEX

(% of revenue) 9% - 10% 10% - 12% ~$550m per quarter for FY 13/14

~2/3 for research & development Tax Rate

(% of PTI) 6% - 9% 7% - 10% Without potential future repatriation CAPEX

(% of revenue) 7% - 8% 5% - 7% Modest volume growth assumptions technology investments / transitions CCC

(days) 4 - 8 4 - 8 Continued strong focus on working

capital efficiency

Our long-term financial goals are based upon a variety of estimates and assumptions w hich may not be realized. The assumptions our management used as a basis for the long-term financial goals are not facts and should not be relied upon as being necessarily indicative of future results. The company does not intend, and undertakes no duty, to update these long-term financial goals to reflect subsequent events or circumstances; how ever, the company may update these long-term financial goals or any portion thereof at any time at its discretion.

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Focused on Shareholder Value

CAPITAL ALLOCATION STRATEGY

Cash Return to Shareholders

Targeting to return 50% of FCF

Additional $1.5b share buyback authorization

Quarterly dividend of $0.25

Key Financial Considerations

Minimum cash for operations and contingencies

Focus on CAPEX and CCC Investment grade leverage Rigorous, DCF based review of acquisitions

Executive compensation aligned to Economic Profit

Mix of buybacks / dividends

share buybacks

dividends multiple of FCF

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Thank you

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Appendix

Free cash flow is a non-GAAP financial measure defined as cash flows from operations less capital expenditures. A reconciliation of cash flow from operations to free cash flow for the periods presented is below:

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