WD Media (KOMG) 8-K Komag Reports First Quarter 2007 Financial Results

Exhibit 99.1

Investors and Press Contact:
Kathy Bayless
Chief Financial Officer
(408) 576-2000
ir_web@komag.com

Komag Reports First Quarter 2007 Financial Results

— Revenue up 27% over prior year period

— Over 8.4 million PMR disks shipped in the first quarter of 2007

— 9.7 million PMR disks shipped in the past two quarters

FOR IMMEDIATE RELEASE

SAN JOSE, Calif.,April 25, 2007— Komag, Incorporated (Nasdaq: KOMG), a leading independent supplier of thin-film media for disk drives, today announced revenue of $264.7 million and diluted earnings per share of $0.99 for the first quarter of 2007. Revenue increased 27% over the prior year’s first quarter. Finished disk shipments increased 25% in the first quarter of 2007 compared to the prior year period and decreased 5% from the fourth quarter of 2006.

Tim Harris, Komag’s Chief Executive Officer stated, “The first quarter of 2007 followed a fairly typical seasonal pattern. Overall demand for disk drives and our media tends to be slower in the first half of the calendar year. We shipped 39.8 million finished disks in the first quarter of 2007, of which over 8.4 million or 21% of our finished disk shipments were advanced PMR disks. PMR disk shipments over the last two quarters totaled 9.7 million disks.”

Revenue in the first quarter included sales of precious metals inventory totaling $11.2 million. Gross margin for the first quarter was negatively impacted by the high cost of precious metals primarily used in the production of PMR media and an unfavorable Malaysian Ringgit currency rate change.

In March 2007, the Company issued $250 million of 2.125% Convertible Subordinated Notes due in 2014. The Company used approximately $125 million of the proceeds to buy back 3,815,000 shares of the Company’s common stock. The stock repurchases were made under a $200 million stock buy back program established by the Board of Directors in March 2007.

On April 13, 2007, the Company completed its previously announced redemption of its $80.5 million 2.0% Convertible Subordinated Notes due 2024 (the “2.0% Notes”). Holders of all of the 2.0% Notes elected to convert their notes into shares of the Company’s common stock, in accordance with the terms of the notes, rather than having their notes redeemed and receiving the redemption price. In connection with the conversion of the 2.0% Notes, the Company issued 3,049,234 shares of its common stock.

These 3,049,234 shares of common stock have been included in the number of diluted shares outstanding for the earnings per share calculation since the 2.0% Notes were issued in 2004. As such, the conversion of the 2.0% Notes into shares of common stock will not impact the number of diluted shares outstanding in the future.

First Quarter Review

Sales to Western Digital, Seagate and Hitachi Global Storage Technologies accounted for 37%, 37% and 21% of disk product (media and substrates) revenue in the first quarter of 2007, respectively. Total finished disk shipments were 39.8 million in the first quarter of 2007.

High capacity 3.5-inch advanced disks with storage capacities of 160GB and above represented approximately 41% of our total finished disk shipments in the first quarter of 2007. This included shipments of over 8.4 million PMR disks. These disks are primarily targeted for high capacity desktop and multi-platter consumer applications. These rapidly growing consumer applications include personal video recorders (PVRs), digital video recorders (DVRs), high definition television (HDTV), external storage, gaming and other home entertainment devices.

Other revenue, which includes sales of aluminum substrates, nickel-plated polished aluminum substrates and textured substrates, and the sale of precious metals inventory, accounted for 18% of our total revenue in the first quarter. Other revenue, excluding the sale of precious metals inventory, represented 14% of disk product revenue.

Business Outlook

“We expect that revenue in the second quarter of 2007 will be down approximately 8% to 10%, excluding the $11.2 million sale of precious metals inventory in the first quarter of 2007. While we normally plan for a seasonal decline in the second quarter, we started the second quarter more slowly than normal as some customers readjusted their plans to the current demand environment.

With our expected revenue level, the mix of finished media and substrate sales and lower capacity utilization, our net margin is expected to be in the range of 8% to 10% in the second quarter of 2007.

Komag is continuing to ramp up our PMR media and we expect shipments of this new technology product to grow significantly over the course of 2007. We expect to qualify into a 65mm glass PMR program as early as the second quarter of 2007,” said Mr. Harris.

About Komag

Founded in 1983, Komag is a leading independent supplier of thin-film disks, the primary high-capacity storage medium for digital data. Komag leverages the combination of its world-class U.S. research and development center and Malaysian manufacturing operations to produce disks that meet the high-volume, stringent quality, low cost and demanding technology needs of its customers. By enabling rapidly improving storage density at ever-lower cost per gigabyte, Komag seeks to create extraordinary value for consumers of computers, enterprise storage systems and electronic appliances such as digital video recorders, game boxes and consumer electronic storage systems.

For more information about Komag, visit Komag’s Internet home page at http://www.komag.com. The Investors section of the website provides a variety of financial and investor information, including an investor presentation. To request an investor packet, call Komag’s Investor Relations at 408-576-2901.

Forward-Looking Statements

This press release contains certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. These statements represent the Company’s current judgment and include, but are not limited to, the expectation that revenue for disk products (excluding the sale of precious metals inventory in the first quarter) in the second quarter of 2007 is expected to be down approximately 8% to 10% compared to the first quarter of 2007, the Company’s expectations regarding product transition plans and increase in the production of PMR products, the Company’s expectations for PMR media shipments and customer qualifications (including glass media) during 2007, the Company’s expectation regarding the growth of the disk drive industry for 2007, the Company’s expectation that net margin will be in the range of 8% to 10% in the second quarter of 2007, the Company’s ability to accurately estimate costs, net margin, the market for unit shipments of disks and disk drives, the Company’s belief in continued increased demand trends, and the benefits of the Company’s increased capacity arrangements with its customers and market growth opportunities. The Company’s actual results for future periods could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, the Company’s ability to achieve operating yield, cost and profitability targets, adverse changes in the currency exchange rate for the Malaysian ringgit, continued customer demand and the impact of demand variation on factory utilization, the performance by the Company and customers of their obligations under the respective increased capacity arrangements, changes in demand, changes in the price and availability of raw materials (including ruthenium which has experienced significant price increases), the Company’s ability to increase capacity, variability in demand and associated impact on average selling price of disks, the Company’s ability to satisfy customer qualification requirements and meet shipping demands, the Company’s expectation that industry unit demand will continue to grow and not decline and the Company’s ability to produce new generation disks in volume and the other factors described in the Company’s reports filed with the Securities and Exchange Commission, including, but not limited to, our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Komag undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.

KOMAG, INCORPORATED
Consolidated Income Statements
(in thousands, except per share data)
(Unaudited)

	Three Months			Three Months			Three Months
	Ended			Ended			Ended
	April 1, 2007			December 31, 2006			April 2, 2006
Net Sales	$	264,666		$	255,929		$	208,512
Cost of Sales		205,660			194,088			149,419
Gross Profit		59,006			61,841			59,093
Gross Profit %		22.3	%		24.2	%		28.3	%
Research, Development, and Engineering Expense		16,499			15,408			15,075
Selling, General, and Administrative Expense		8,467			7,289			8,024
Gain on Disposal of Assets		(54	)		(145	)		(60	)
Operating Income		34,094			39,289			36,054
Interest Income		1,459			1,510			2,071
Interest Expense		(511	)		(441	)		(441	)
Other Income (Expense), Net		(5	)		7			(476	)
Income before Income Taxes		35,037			40,365			37,208
Provision (Benefit) for Income Taxes		2,060			(6,144	)		971
Net Income	$	32,977		$	46,509		$	36,237
Net Income %		12.5	%		18.2	%		17.4	%
Basic Net Income per Share	$	1.09		$	1.54		$	1.22
Diluted Net Income per Share	$	0.99		$	1.39		$	1.09
Basic Shares Outstanding		30,166			30,138			29,685
Diluted Shares Outstanding		33,811			33,715			33,499

KOMAG, INCORPORATED
Condensed Consolidated Balance Sheets
(in thousands)

	April 1, 2007		December 31, 2006
	(Unaudited)		(NOTE 1)
ASSETS
Cash, Cash Equivalents, and Short-Term Investments	$	253,458	$	171,132
Receivables, Net		136,941		140,230
Inventories:
Raw Materials		130,993		78,701
Work In Process		17,368		15,900
Finished Goods		11,240		9,580
Total inventories		159,601		104,181
Prepaid Expenses and Deposits		2,437		2,119
Total Current Assets		552,437		417,662
Property, Plant, and Equipment, Net		538,890		542,585
Other Assets		21,668		17,440
TOTAL ASSETS	$	1,112,995	$	977,687
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade Accounts Payable	$	148,769	$	139,477
Customer Advances		101,139		127,181
Other Liabilities		15,651		25,412
Total Current Liabilities		265,559		292,070
Long-Term Debt		330,500		80,500
Other Long-Term Liabilities		3,677		3,091
Stockholders’ Equity		513,259		602,026
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,112,995	$	977,687

NOTE 1: The Condensed Consolidated Balance Sheet at December 31, 2006 was derived from the audited financial statements.

KOMAG, INCORPORATED
Condensed Consolidated Statements Of Cash Flows
(In thousands)

	Three Months Ended
	April 1, 2007			April 2, 2006
	(Unaudited)			(Unaudited)
Operating Activities
Net income	$	32,977		$	36,237
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, plant, and equipment		25,562			14,474
Other non-cash items		7,764			4,502
Changes in operating assets and liabilities		(76,931	)		3,520
Net cash provided by (used in) operating activities		(10,628	)		58,733
Investing Activities
Acquisition of property, plant, and equipment		(24,655	)		(73,988	)
Short-term investments, net		(20,500	)		20,050
Other		98			34
Net cash used in investing activities		(45,057	)		(53,904	)
Financing Activities
Proceeds from long-term obligations, net of issuance costs		243,235			—
Repurchase of common stock		(126,492	)		(1,049	)
Proceeds from sale of common stock, net		682			2,225
Net cash provided by financing activities		117,425			1,176
Effect of exchange rate changes on cash and cash equivalents		86			—
Increase in cash and cash equivalents		61,826			6,005
Cash and cash equivalents at beginning of period		129,632			99,984
Cash and cash equivalents at end of period	$	191,458		$	105,989