Seagate Technology plc ([stock]STX[/stock]) recently announced that its board of directors has approved the payment of a quarterly cash dividend of 18 cents per share. The company will pay the dividend on June 1, to shareholders on record as of May 2.
Seagate had suspended its dividend payout policy in April 2009, as the company’s fortunes plummeted along with the economy. Prior to that, Seagate used to pay a quarterly cash dividend of 3 cents per share. Now, based on its strong cash position and continued free cash flow, the company is back on track to offer its shareholders an approximately 5% dividend yield on their holdings. We think the dividend will help build investor sentiment. Shares price jumped 1.08% to $ 15.84 on April 8.
Seagate exited the second quarter with $ 2.91 billion in cash, up from $ 2.17 billion in the previous quarter. During the quarter, Seagate repurchased 21 million shares worth $ 305.0 million.
The company intends to maintain a cash balance in case it needs to adapt to changing market dynamics and benefit from unanticipated opportunities for growth.
Apart from the dividend announcement, Seagate also provided a brief update on its third quarter results, slated for release next week.
Seagate expects revenue of $ 2.7 billion, which is lower than what they generated in the year-ago quarter but at the higher end of the guided range. The company’s previous expectation for a sequential revenue decline in the third quarter was predicated on the volatility in demand.
Seagate posted disappointing second quarter results, missing the Zacks Consensus Estimate on the top line.
Though we remain somewhat positive over Seagate’s strong exposure to the Enterprise Solid State Disk market, weakness in the consumer segment, price erosion, falling demand and competitive pressure from Western Digital Corporation ([stock]WDC[/stock]) keep us on the sidelines.
Currently, Seagate has a Zacks #3 Rank, indicating a short-term Hold rating.
SEAGATE TECH (STX): Free Stock Analysis Report
WESTERN DIGITAL (WDC): Free Stock Analysis Report
Zacks Investment Research
Be the first to comment