Capital Markets

At Week’s End, a Buyback Boom

Texas Instruments, Halliburton lead latest buyback wave.
Stephen TaubSeptember 22, 2006

Despite a recent rally in the stock market, cash-rich companies continue to aggressively buy back large chunks of their own stock. In just the past few days, Texas Instruments, Halliburton, and Agilent Technologies have announced multibillion buybacks that represent a sizable percentage of their overall stock-market capitalization. Several smaller companies have also announced major repurchase programs.

Texas Instruments said Thursday evening that it will buy back up to $5 billion of its stock, on top of the $1.8 billion it has already authorized to repurchase. The latest announcement brings to $15 billion the total amount of stock repurchases authorized by TI’s board since September 2004. During this period, the chipmaker has reduced the number of its shares outstanding by more than 200 million, or more than 10 percent. TI’s buyback is part of a wider effort to return cash to shareholders — the company also said it would raise its quarterly cash dividend by 33 percent.

Halliburton, whose stock has recently been bouncing around its 52-week low, said Friday morning that its board authorized it to boost its repurchase program by an additional $2 billion. The company stressed in its announcement that the repurchase program does not actually require it to acquire a specific number of shares. As of September 21, the company had repurchased $983 million of its shares under a $1 billion buyback program announced back in February.

On Wednesday, Agilent announced that its board approved a share-repurchase program of up to $2 billion of its stock during the next two years, bringing Agilent’s total share-repurchase commitment to about $6.5 billion. This new program follows an announcement last June in which the electronics test and equipment maker said it had completed its initial $4.5 billion share-repurchase program.

“Today’s announcement regarding our share-repurchase program underscores our financial strength and ability to deploy cash to increase shareholder value,” said Agilent president and chief executive officer Bill Sullivan in a statement.

And buyback programs are not limited to large companies. On Thursday evening, Palm Inc. said its board approved a stock buyback program of up to $250 million of its stock. This represents nearly 17 percent of its total market cap.

Tektronix Inc. also expanded its stock buyback plan by $300 million on Thursday, bringing its total authorization to $490 million. Since the beginning of 2000, the company said, it has repurchased about $760 million of its stock.

And Arch Coal Inc. said Thursday it will repurchase up to 14 million shares of its stock, effective immediately. This represents about 10 percent of its total shares outstanding.

“The long-term outlook for the U.S. coal sector continues to strengthen, and we believe that Arch’s extensive reserve base, highly productive operations and skilled work force position the company for future success,” said Steven Leer, Arch Coal chairman and CEO, in a statement. “As a result, Arch’s board and management consider the company’s stock to be an attractive investment option, and we view share repurchase as an effective way to create value for shareholders.”