Hard-drive maker Western Digital Corp. (WDC: Quote) said Thursday that it will start paying quarterly cash dividends and boosted its share repurchase authorization by $1.5 billion as part of a capital allocation plan. At the same time, the company cut its revenue outlook for its current fiscal quarter due to weak demand.
The Irvine, California-based company declared a quarterly cash dividend of $0.25 per share, payable on October 15 to shareholders of record as of September 28.
Western Digital said at its investor day that it is targeting a return of about 50% of its free cash flow to its shareholders through a mix of cash dividends and share repurchases, beginning in its current fiscal year 2013.
Additionally, the company cut its forecast for the industry's total available market for hard drives in the September quarter to about 140 million units from its previous forecast of 157 million units, due to muted demand and inventory rebalancing.
As a result, the company said it now expects its first fiscal quarter revenue to be in the range of $3.9 billion to $4.0 billion, compared with its prior expectation of $4.2 billion to $4.3 billion. Analysts polled by Thomson Reuters currently expect the company to post revenue of $4.33 billion for the first quarter.
The demand for hard drives is directly tied to the PC market, which has experienced considerable weakness recently due to a challenging macroeconomic environment. Earlier this month, Intel Corp. (INTC), the world's largest supplier of microprocessors, the brains of personal computers, cut its revenue forecast for the current quarter, citing weaker than expected demand. PC makers Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL) have also issued warnings.
However, Western Digital also reiterated its fiscal 2013 adjusted earnings outlook of $10 per share. Analyst currently expect the company to earn $9.25 per share for the fiscal year ending June 28, 2013.
Western Digital, which have traded in a range of $22.64 to $45.94 over the past year, closed Thursday's regular trading session at $42.58, up $1.10 or 2.65%.
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by RTT Staff Writer
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