Technology
Western Digital Gains on Solid Q2 Guidance Update
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Western Digital Corp. (NASDAQ: WDC) shares saw a handy gain early on Wednesday after the company issued an update on its business and, specifically, guidance. The company updated its fiscal second-quarter guidance, for the period that ends on December 30, 2016.
Rival Seagate Technology PLC (NASDAQ: STX) also saw an early gain on Western Digital’s updated guidance.
Western Digital now expects earnings per share (EPS) to be in the range of $2.10 to $2.15 and revenues of $4.75 billion. The previous guidance for this quarter was EPS in the range of $1.85 to $1.95. The consensus estimates are EPS of $1.89 and $4.73 billion in revenue.
Western Digital noted that it has been enabled by continued strong acceptance from customers and favorable mix of its broad product portfolio, solid execution, and including the contribution of incremental intellectual property revenue from the new cross license agreement with Samsung.
The terms of the renewed Samsung agreement are retroactive to the end date of the prior agreement, which expired on August 14, 2016. The renewed agreement will run through December 31, 2024. The agreement includes rights to each party’s patents broadly covering multilevel cell flash memory and flash storage systems. The original agreement, which dates back to 1997 and had been renewed twice before, had permitted Samsung to use patented flash memory technologies invented by SanDisk, which Western Digital acquired in May 2016.
Ultimately, this agreement allows Western Digital to continue to realize the value of the SanDisk acquisition and extends the company’s mutually beneficial relationship with Samsung. Financial terms of the renewed agreement were not disclosed.
Shares of Western Digital were up over 5% at $67.34 Wednesday morning. The stock has a consensus analyst price target of $71.17 and a 52-week trading range of $34.99 to $65.99.
Seagate shares were last seen up fractionally at $39.22, with a consensus price target of $38.98 and a 52-week range of $18.42 to $40.97.
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