MANHASSET, N.Y. Semiconductor supplier Intel Corp. announced that its board of directors has authorized the repurchase of up to $25 billion in shares of common stock under the company's ongoing stock repurchase program. The board also approved a 25 percent increase in the quarterly cash dividend to 10 cents per share beginning the first quarter of 2006.
The high amount of the stock repurchase is curious given the recent turn of events at Intel (Santa Clara, Calif.). The company fell short of earnings guidance
in its most recent quarter, amidst chipset shortages
. The company did not bolster its projected capital expenditures for 2005, and projected fourth-quarter earnings that some analysts deemed conservative.
Intel could also be feeling more heat from its archrival AMD Inc. Not only did AMD soundly beat
its own projected third-quarter guidance, but the company edged out Intel in processor sales to the U.S. PC desktop retail sector
But Intel also has a long history of dividends and share repurchases, and may be trying to ensure stockholder confidence at a time when the company is coming under increasing attack by rivals.
"Intel's investments in R&D and capital are enabling the company to post its third consecutive year of double-digit revenue growth," said Paul Otellini, Intel president and CEO, in a statement. "At the same time, we are returning record amounts of cash to our stockholders with one of the highest dividend yields in the technology industry and one of the largest share buyback programs of any company. Today's announcement signals our confidence in the growth, earnings and cash generating potential of our business."
The company began paying a cash dividend in 1992 and has paid out roughly $5.8 billion to its stockholders over the past 52 quarters. Intel cash dividends for 2005 will total approximately $2 billion.
Since the company's stock buyback program began in 1990, Intel has repurchased approximately 2.5 billion shares for about $49 billion. For the first three quarters of this year, Intel repurchased over 300 million shares at a cost of $7.5 billion, which compares to $7.5 billion in repurchases for all of 2004, the previous record for a full year. The average number of Intel common shares outstanding declined by over 10 percent from their peak during 1998 to approximately 6.1 billion as of the end of the third quarter of this year.
As of the end of the third quarter, approximately 313 million shares of stock remained available for repurchase under previous authorizations expressed in share amounts, representing approximately $7.8 billion of stock at the current stock price level. The board's authorization to repurchase up to $25 billion in shares includes this $7.8 billion of shares available for repurchase under previous authorizations.