Seagate buys back $1.51B worth of shares from Samsung

Seagate (STX -0.7%) paid Samsung $1.51B to repurchase 32.7M shares at a price of $46.03. The buyback allows Seagate to retire 9.1% of its outstanding shares. (8-K) (PR)

Samsung continues to own 12.5M Seagate shares, courtesy of the former's 2011 sale of its hard drive unit to the latter. Samsung chip division chief Seh-Woong Jeong will remain on Seagate's board.

Seagate has been aggressively buying back shares over the last two years (though its pace slowed to $42M in the June quarter), and has promised to return ~70% of its FY14 (ends June '14) operating cash flow to shareholders. The company had $2.3B in cash/investments on its balance sheet as of June 28, and $2.78B in debt.

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Comments (6)
  • lanettedonovan1
    , contributor
    Comments (31) | Send Message
    I suppose this slows buy back and dividiends for the rest of investors
    8 Oct 2013, 12:26 PM Reply Like
  • 2tired2talk
    , contributor
    Comments (203) | Send Message
    Lanette, your bio says you're a portfolio manager? How can you make such a ridiculous comment?


    STX bought back 9% of the company. Today I own 9% more of STX than I did last week. STX has 9% fewer shares on which it needs to pay dividends. STX management has told us for several quarters that they intend to bring shares outstanding down to less than 250mm by the end of 2014.


    This buy back does not "slow down" anything. 17 years of asset management experience, and you're whining about something this good for all shareholders.
    8 Oct 2013, 01:36 PM Reply Like
  • Rhianni32
    , contributor
    Comments (2086) | Send Message
    I was wondering the same thing after reading lanette's bio.
    8 Oct 2013, 03:27 PM Reply Like
  • twhite113
    , contributor
    Comments (484) | Send Message
    Normal market day and this would have stayed well above $46.
    8 Oct 2013, 05:27 PM Reply Like
  • WhatdoIknow1
    , contributor
    Comments (652) | Send Message
    That 10% will find it's way to the share price and as the share count diminishes the likelihood of a dividend raise will also increase. With this management team I would say a dividend raise of at least five cents will be forth coming with some certainty.


    Long STX
    8 Oct 2013, 09:46 PM Reply Like
  • GEC1358
    , contributor
    Comments (69) | Send Message
    The large Samsung buy back potentially indicates another three things.
    STX’s best use of the cash was to buy back shares as opposed to capacity expansion
    Intent to diminish Samsung influence (board seat is maintained by not mandated)
    Fulfillment of commitment (the action was by contract stipulation)
    The share buy back will increase the value of remaining shares if the top line and margins remain the same. Unfortunately, the demand/price bubble caused by flood related industry capacity reduction is long past and we most likely will see top line reduction year over year. Hopefully, the share reduction will offset a portion of the return to “normal” demand.
    10 Oct 2013, 03:16 PM Reply Like
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