Seagate to Pay 5% Dividend

Seagate Technology plc announced that its Board of Directors has approved a quarterly cash dividend of $0.18 per share.

The first dividend will be payable on June 1, 2011 to shareholders of record as of the close of business on May 2, 2011. This dividend represents a quarterly payout of approximately $75 million in aggregate, or $300 million on an annualized basis. The payment of any future quarterly dividends will be at the discretion of the Board and will be dependent upon Seagate’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board.

"The establishment of a quarterly dividend reflects the strength of our balance sheet and the exceptional cash generation ability of our business, as well as the confidence that the Board and the management team have in the Company’s ability to generate free cash flow on a sustained basis," said Steve Luczo, Seagate chairman, president and CEO. "We are taking this action as a part of Seagate’s ongoing commitment to a balanced capital deployment strategy to maximize shareholder value. We will continue to evaluate a wide range of strategic uses for cash going forward."

Seagate expects to maintain a prudent cash balance that will enable the company to respond to changes in market dynamics, take advantage of unexpected opportunities and provide flexibility for future investments in growth.

Fiscal Third Quarter 2011 Preliminary Financial Results
For the fiscal third quarter which ended April 1, 2011, Seagate management expects to report revenue of approximately $2.7 billion, unit shipments of 49 million and gross margin as a percent of revenue near or slightly above the high-end of the original outlook range of 18-19%. Cash, cash equivalents and short-term investments at the end of the fiscal third quarter totaled approximately $2.5 billion. Inventory in the distribution channel of Seagate 3.5" SATA hard disk drives is below the targeted range of 4-6 weeks on hand.

The preliminary results for the fiscal third quarter do not include the impact of any potential new restructuring activities, future mergers, acquisitions, financing, dispositions or other business combinations the company may undertake.

Comments

"Seagate had paid a dividend at a rate of 12 cents per share per quarter back in fiscal 2009, before cutting it to three cents in the fiscal Q2 ending in January of 2009, and finally eliminating it altogether in Q3 of that year," according to Barron's.

Seagate now expects $2.7 billion revenues and shipments of 49 million units for 3FQ11. Following the former quarter, Luczo said:" We expect revenue of $2.55 billion to $2.7 billion and gross margin of 18% to 19%."

$2.7 million in sales is about the same figure recorded for 2FQ11 corresponding to a 10% decrease compared to 2FQ10.

Seagate stands still.

Like the global industry. We are waiting for the financial results of the disk drives companies in 1Q11 but, for this period, TrendFocus just wrote: "Shipments (will) fall to 161 million. Soft consumer PC demand impacts HDD shipments. Japan earthquake causes scramble for 2Q11 components."