Western Digital Corp. today announced at its Investor Day a capital allocation plan that includes the adoption by its Board of Directors of a cash dividend policy and an increased authorization of $1.5 billion under its share repurchase program. At its webcast Investor Day, the company indicated that beginning in its current fiscal year 2013, it is targeting a return to shareholders of approximately 50 percent of its free cash flow through a mix of cash dividends and share repurchases.

Under the dividend policy, the company intends to pay a quarterly cash dividend on its common stock beginning with the quarter ending Sept. 28, 2012. Directors declared today a dividend of $0.25 per common share, payable on Oct. 15, 2012, to the company's shareholders of record as of Sept. 28, 2012.

The additional repurchase authorization is effective immediately. Share repurchases will be made on the open market or in privately negotiated transactions and may be made pursuant to Rule 10b5-1 plans.

The amount and timing of share repurchases and future dividends under the company's dividend policy will depend on market conditions and other corporate considerations. The company may suspend or discontinue the share repurchase program or dividend policy at any time.

The company also announced that it now expects the industry's total available market (TAM) for hard drives in the September quarter to be approximately 140 million units versus its earlier forecast of 157 million units, due to muted demand and inventory rebalancing. As a result, the company now expects revenue for its first quarter ending Sept. 28, 2012, will be approximately $3.9 billion to $4.0 billion, compared with its previous expectation of $4.2 billion to $4.3 billion. The company continues to estimate its gross margin for the September quarter to be approximately 30 percent on a non-GAAP basis.

The company reiterated its non-GAAP $10 earnings per share target for the fiscal year ending June 28, 2013.