**Bullish Points:**
1. Net revenue for the quarter increased by 25% to $3,017 million, driven by a 22% increase in exabytes sold and a 2% increase in average selling price per exabyte.
2. Gross profit rose by $473 million to $1,380 million, with gross margin improving by 8 percentage points to 45.7%, due to a lower cost structure and improved pricing.
3. Operating income increased by $348 million to $908 million, reflecting higher gross profit and controlled operating expenses.
4. Net income from continuing operations surged by $1,376 million to $1,842 million, aided by higher operating income and an unrealized gain of $1.10 billion on the retained interest in Sandisk.
5. For the six months, net revenue increased by 26% to $5,835 million, gross profit by $894 million to $2,607 million, and operating income by $806 million to $1,700 million.
6. Net income from continuing operations for the six months increased by $2,405 million to $3,024 million, driven by higher operating income and an unrealized gain of $1.71 billion on the retained interest in Sandisk.
7. The effective tax rate was low at 6%, benefiting from tax credits and a tax-free gain on the retained interest in Sandisk.
8. Strong cash position with cash and cash equivalents at $1,975 million and net cash provided by operating activities amounting to $1,417 million.
9. The company repurchased 10.2 million shares for $1.17 billion, indicating confidence in its stock value.
10. Cash dividends of $0.225 per share were paid, totaling $77 million, reflecting a commitment to returning value to shareholders.
**Bearish Points:**
- The report does not highlight any specific bearish points, but the reliance on unrealized gains for net income growth could be a potential risk if market conditions change.
**Summary:**
Western Digital (WDC) has reported strong financial performance for the quarter and six months ended January 2, 2026, with significant increases in net revenue, gross profit, and net income. The company's improved gross margin and controlled operating expenses have contributed to higher operating income. Additionally, the unrealized gains on the retained interest in Sandisk have significantly boosted net income. The effective tax rate remains low, and the company maintains a strong cash position, further supported by share repurchases and dividend payments. While the financials are robust, the reliance on unrealized gains for income growth could pose a risk if market conditions shift. For more information, you can read the original text of Western Digital(WDC)'s financial report .
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