Western Digital (WDC) Cuts Q4 EPS Outlook Following SanDisk Acquisition

Western Digital® Corp. (Nasdaq: WDC) announced its updated financial guidance for its fourth fiscal quarter ending July 1, 2016, to reflect the contribution of the recently acquired SanDisk business.

Reflecting the ownership of SanDisk as of May 12, 2016, Western Digital now expects its fourth quarter revenue in the range of $3.35 billion to $3.45 billion compared to its earlier forecast of $2.6 billion to $2.7 billion. The company now expects its fourth quarter EPS on a non-GAAP basis to be between $0.65 to $0.70, compared with its earlier forecast of $1.00 to $1.10 per share. The new guidance includes total interest costs of approximately $220 million, which includes interest expense on newly issued debt of approximately $185 million and amortization of debt issuance costs of approximately $30 million. Interest expense on the newly issued debt includes approximately $50 million incurred prior to the deal closing date. Due to the impact of the interest expense, the company estimates a non-GAAP tax benefit of approximately $15 million for the quarter. Diluted share count for the quarter, including shares issued to SanDisk shareholders as of May 12, 2016, is expected to be 266 million, equivalent to 290 million shares on a full quarter basis.

*** The Street sees Q4 revenue of $3.35 billion and EPS of $0.90.

The company is posting an updated Quarterly Fact Sheet on the Investor Relations section of its website (investor.wdc.com) to reflect the updated fourth fiscal quarter guidance and include metrics related to its debt and estimated effective tax ranges.

The company is hosting an investment community conference call today at 2 p.m. Pacific/5 p.m. Eastern to discuss the updated guidance. The live and archived conference call/webcast can be accessed online at investor.wdc.com. The telephone replay numbers are 1 (855) 859-2056 in the U.S./Canada or dial +1 (404) 537-3406 for international callers. The required passcode for the replay is 16177589.

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