Analog firms step up stock buybacks
8/15/2012 2:08 PM EDT
Traditionally, companies buy back their stock because they believe their
shares are undervalued. For Intersil (Milpitas, Calif.), its dividend
yield is higher than the interest rate it is getting on its cash, so for
every share it repurchases it is saving money, analysts said.
said its stock repurchase program is designed to help reduce the
dilution of its shares from employee options and grants. “The repurchase
will offset the dilution we’ve experienced over the last four years,”
said Intersil’s Brendan Lahiff.
The analog industry is currently
at the bottom of the semiconductor cycle with overall demand expected to
be flat over the next six months, according to analysts. Stock prices
Analog chip makers tightened their belts beginning
in 2008, but cost reductions are still occurring as seen by Intersil’s
recent layoffs. It is unlikely that the analog sector will see
significant increases in its workforce anytime soon.
MagnaChip, a three-pronged approach to its cash utilization efforts
includes not only a share buyback program, but investing in its foundry
business while boosting its IP portfolio via acquisitions, said Robert
Pursel, director of investor relations. MagnaChip is also using its cash
to add headcount in its Cupertino, Calif., facility.
third quarter, MagnaChip expects revenue to increase between 7 percent
and 11 percent, to $217 million to $225 million on a sequential basis.