Cash Management

Four Companies Announce Big Buybacks

Texas Instruments; McDonald's; McGraw-Hill; Rambus.
Stephen TaubJanuary 24, 2006

In the past day or two, a number of large companies have announced sizable share buybacks, intended either to raise their share price by reducing total shares outstanding or to offset growth in shares outstanding resulting from the exercise of stock options.

Texas Instruments disclosed late Monday that its board of directors authorized the repurchase of an additional $5 billion of common stock, doubling its announced stock buybacks to $10 billion since September 2004. The company also reported strong earnings, but its share price took a hit Tuesday morning after analysts felt the company issued a lukewarm outlook for the beginning of 2006.

McDonald’s announced that it plans to repurchase $1 billion of its shares in the first quarter of 2006. This is part of a plan to return between $5 billion and $6 billion to shareholders through dividends and share repurchases during 2006 and 2007, the company noted in a press release.

The McGraw-Hill Cos. announced that its board authorized a new stock repurchase program for up to 45 million shares, or about 12.1 percent of those outstanding. The company disclosed that subject to market conditions, during 2006 it expects to repurchase up to 15 million shares from the new program. In addition, over the next several months it expects to repurchase roughly another 3.4 million shares that remain available under a buyback plan authorized in January 2003. Historically, the company noted, roughly 40 percent of repurchased shares have been used to reduce total shares outstanding.

Rambus Inc., which licenses computer-memory technology to chipmakers, announced that its board approved an increase of 5 million shares in the authorization under the company’s stock repurchase program, which has been in effect since October 2001. This is in addition to the remaining current authorization for 1.6 million shares.

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