Capital Markets

Intel Sets $25 Billion Buyback

The stock-repurchase plan is the second-largest ever, trailing only Microsoft's $30 billion program.
Stephen TaubNovember 10, 2005

Intel Corp. announced a couple of critical measures designed to boost its share price and reward investors.

The chip maker announced that it will buy back up to $25 billion worth of common shares and that it will increase its dividend by 25 percent, to 10 cents per share, beginning with the first quarter of 2006.

Intel’s new buyback program is the second-largest ever, trailing only Microsoft’s $30 billion repurchase plan, according to Bloomberg. The $25 billion includes about $7.8 billion that remained available for repurchase under previous authorizations, as of the end of the third quarter.

Since the company’s buyback program began in 1990, Intel has repurchased roughly 2.5 billion shares for about $49 billion. During the first three quarters of this year, Intel repurchased more than 300 million shares for about $7.5 billion, the same amount that the company spent on repurchases during all of 2004, the previous record year.

The average number of Intel common shares outstanding has declined by more than 10 percent from the peak during 1998, to approximately 6.1 billion at the end of the third quarter.

Intel began paying a cash dividend in 1992 and has paid out approximately $5.8 billion to its stockholders over the past 52 quarters. The company stated that it will distribute about $2 billion in cash dividends this year.

“No business they could invest in is as good as buying their own stock,” Tim Allen of money manager Wentworth, Hauser & Violich told Bloomberg. “Any business you get into is not going to be as good as the business you have, so it’s easier to buy your own stock. It’s about earnings, and that’s what we like to hear.”