Intel’s Gamble: $10B for Buybacks Rather Than Deals (INTC)
Intel Corporation (NASDAQ: INTC) is announced this morning that it was increasing its share repurchase program by a whopping $10 billion. While this is a positive, it does raise some questions. This places the share repurchases north of $14 billion. …
This places the share repurchases north of $14 billion. This means that Intel would rather spend this capital on shares rather than on defending its processor business by getting deeper into smartphones where it currently lags.
Intel’s Infineon deal will get it more into the mobility market, but that is a story that will take place later in 2011 rather than sooner.
As reminder, buybacks are very controversial. Barron’s just noted this weekend, “There’s scant evidence they do much for stock prices, other than produce small short-term pops.” Some work well, some do not.
There is also news that Intel was raising its dividend to $0.18 but we first saw the dividend news back in November.
Intel shares are up 1.4% at $21.10 on about 9 million shares against a 52-week trading range of $17.60 to $243.7 in the first few minutes of the trading session this Monday.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
