Intel announces $10 billion share buyback

[Jet_ski]

Summary

Intel shares are on the rise after the chip company announced a $10 billion accelerated stock repurchase program. After completion the buyback, Intel said it will have repurchased $17.6 billion of the $20 billion authorization it announced in October 2019.

Intel said it’s funding the buyback with existing cash resources. It expects to complete the remaining $2.4 billion of the $20 billion repurchase program “when markets stabilize.”

 

Quotes

Quote

Intel Corp rose after announcing a $10 billion share buyback plan.

 

My thoughts

This is disappointing. Intel’s competitors are all making big moves: Apple is going ARM, Nvidia is dominating the GPU as a processor market, AMD is making excellent new stuff. So what’s Intel’s response? Not R&D, not 7nm processors, not making good CUDA equivalents. No. They want to buyback their stocks because the CEO thinks the stocks is cheap ever since the stock tanked because the 7nm was delayed again.

 

Sources

Intel CEO Says Its Stock Is Too Cheap. Here’s What He’s Doing About It. https://www.barrons.com/articles/intel-stock-jumps-on-10-billion-stock-buyback-51597876288

[Kisai]

7 minutes ago, Jet_ski said:

Summary

Intel shares are on the rise after the chip company announced a $10 billion accelerated stock repurchase program. After completion the buyback, Intel said it will have repurchased $17.6 billion of the $20 billion authorization it announced in October 2019.

Intel said it’s funding the buyback with existing cash resources. It expects to complete the remaining $2.4 billion of the $20 billion repurchase program “when markets stabilize.”

 

Quotes

 

My thoughts

This is disappointing. Intel’s competitors are all making big moves: Apple is going ARM, Nvidia is dominating the GPU as a processor market, AMD is making excellent new stuff. So what’s Intel’s response? Not R&D, not 7nm processors, not making good CUDA equivalents. No. They want to buyback their stocks because the CEO thinks the stocks is cheap ever since the stock tanked because the 7nm was delayed again.

 

Sources

Intel CEO Says Its Stock Is Too Cheap. Here’s What He’s Doing About It. https://www.barrons.com/articles/intel-stock-jumps-on-10-billion-stock-buyback-51597876288

That's technically the right thing to do from company point of view, but always a waste of money that the shareholders would rather have as a dividend.

[Letgomyleghoe]

3 minutes ago, Kisai said:

That's technically the right thing to do from company point of view, but always a waste of money that the shareholders would rather have as a dividend.

I agree I feel like intel stocks are gonna crash tbh, may be a good time to buy...

[themaniac]

everyone is saying that the stock has risen but i dont see that, there was jump of about $1 but then it dropped right back to around the same its been for a while now, so unless im missing something, all this is doing is taking some power back from the shareholders as far as i can see 

[Skipple]

4 minutes ago, themaniac said:

everyone is saying that the stock has risen but i dont see that, there was jump of about $1 but then it dropped right back to around the same its been for a while now, so unless im missing something, all this is doing is taking some power back from the shareholders as far as i can see 

 It popped ~3.5% in afterhours then fell down. This news is from yesterday. 

 

Source: I have some OTM options at the moment so I am watching intel like a hawk. 

[Spotty]

@Jet_ski please no clickbait titles, in particular in the Tech News section. Would you please choose a more relevant title.

• The title of your thread must be relevant to the topic and should give a reader a good idea of the contents of the thread. Copying the title of the source is permitted but absolutely not required. It should be to the point and not be done in such a way as to mislead a reader, such as clickbait, etc.

[Jet_ski]

21 minutes ago, Spotty said:

@Jet_ski please no clickbait titles, in particular in the Tech News section. Would you please choose a more relevant title.

• The title of your thread must be relevant to the topic and should give a reader a good idea of the contents of the thread. Copying the title of the source is permitted but absolutely not required. It should be to the point and not be done in such a way as to mislead a reader, such as clickbait, etc.

Np, I changed the title.

[mr moose]

Stock buy backs are common, last year apple spent $50-60B buying back stock (5 x what Intel have).    It's rarely the result of a product thing but a financial thing, because you need excess cash to do it.

 

 

 

 

[S w a t s o n]

Well if you're gonna spend 10B on buybacks may as well do it after your stock drops by 20%, helps buoy it back up and hey 20% free shares

[GDRRiley]

intels does by backs as AMD hits almost 90$ a share.

 

[porina]

4 hours ago, mr moose said:

Stock buy backs are common, last year apple spent $50-60B buying back stock (5 x what Intel have).    It's rarely the result of a product thing but a financial thing, because you need excess cash to do it.

This. It is not an unusual business practice, if the conditions are right. 

 

I don't know the source of the following phrase and haven't been able to turn it up. "If it takes a woman 9 months to make baby, how long does it take 9 women?". This is where Intel's process problems are at the moment. Throwing more money at it doesn't speed things up. It will take time to execute.

 

So if they are cash rich, what can they do with it? Buy other companies? This is only done it if adds value to the overall organisation. The wrong purchase can cost badly. Try to give shareholder value? If the stock price is lower than target this is an ideal approach. Also note that stock buyback is not an instant or overnight thing. They don't just snap up every share put up for sale. It is a gradual effect over time. What else can they do, lower pricing? This isn't a great idea if they have a pot of cash from previous sales. Individual products have to be realistically priced on their own. If they drop too low (below reasonable costs), that could be seen as anti-competitive behaviour.

[mr moose]

4 minutes ago, porina said:

This. It is not an unusual business practice, if the conditions are right. 

 

I don't know the source of the following phrase and haven't been able to turn it up. "If it takes a woman 9 months to make baby, how long does it take 9 women?". This is where Intel's process problems are at the moment. Throwing more money at it doesn't speed things up. It will take time to execute.

 

So if they are cash rich, what can they do with it? Buy other companies? This is only done it if adds value to the overall organisation. The wrong purchase can cost badly. Try to give shareholder value? If the stock price is lower than target this is an ideal approach. Also note that stock buyback is not an instant or overnight thing. They don't just snap up every share put up for sale. It is a gradual effect over time. What else can they do, lower pricing? This isn't a great idea if they have a pot of cash from previous sales. Individual products have to be realistically priced on their own. If they drop too low (below reasonable costs), that could be seen as anti-competitive behaviour.

Add to that that Intel are already paying a dividend on their shares anyway,  so effectively turning cash deposits into further dividends wouldn't necessarily add enough to please investors, rising the price of the stock over the next few months a with a buy back could though.

[MyName13]

What was the last time they issued new shares?

[Donut417]

Well, that’s one way to keep the stock price stable. 

[AnonymousGuy]

To put in perspective, this is more cash being spent on a buyback than AMD made in revenue in all of 2019.

[mr moose]

10 hours ago, VegetableStu said:

Apple recently did a 1-to-4 stock split recently, didn't they? o_o

not sure, I'd have to look it up.  I don't have any apple shares. Wish I did though.  I'd retire today.

 

 

[Donut417]

I do have a question. How does a buy back work? Does the company contact shareholders to see who wants to sell? 

[Arika]

[Jet_ski]

40 minutes ago, Donut417 said:

I do have a question. How does a buy back work? Does the company contact shareholders to see who wants to sell? 

No. They buy the shares in the open market from whoever sells their shares while the buyback is happening.

[dizmo]

Hahaha, you're complaining about Intel not spending on R&D? Last year they spent 10x what AMD did.

You make it seem like graphics cards and CPUs have a one year research cycle. You couldn't be more wrong.

[dfsgsfa]

what will happen after buyback?

nobody want it any more and sells all to further decrease stock value, then amd or other can take over whole company by aquisition

 

hope not coming true

[Roswell]

22 hours ago, GDRRiley said:

intels does by backs as AMD hits almost 90$ a share.

 

You can’t compare share cost from one company to another, that’s not how it works.

[porina]

5 hours ago, dfsgsfa said:

what will happen after buyback?

The shares that are taken by the buyback essentially disappear from the pool of traded shares. That's why value goes up, the company is split over fewer shares, so existing owners have a bigger share of the company.

 

12 hours ago, Donut417 said:

I do have a question. How does a buy back work? Does the company contact shareholders to see who wants to sell? 

Like the other reply says, it is done on the open market. Even that isn't as simple as it sounds. They don't just immediately buy every share that comes up for sale, as that will prevent others from buying shares. It means sellers could just jack up the asking price to excessive levels. So there is some moderation in the buying so that regular traders can still obtain shares, and they don't buy the high priced offers which would in effect be a short term spike but not a lasting increase.

[Trik'Stari]

On 8/20/2020 at 11:55 PM, Kisai said:

That's technically the right thing to do from company point of view, but always a waste of money that the shareholders would rather have as a dividend.

I'm not sure I understand the difference. Wouldn't a shareholder make more in the short term by selling their stock back, than they would collecting the dividend? 

 

To my understanding, most stock holders care more about buying and selling their stocks/shares than they do about dividends to begin with. From what I understand it's part of the problem with the stock market to begin with. They only care about short term growth, leading to crappy business practices instead of long term brand stability. 

[Kisai]

5 hours ago, Trik'Stari said:

I'm not sure I understand the difference. Wouldn't a shareholder make more in the short term by selling their stock back, than they would collecting the dividend? 

 

To my understanding, most stock holders care more about buying and selling their stocks/shares than they do about dividends to begin with. From what I understand it's part of the problem with the stock market to begin with. They only care about short term growth, leading to crappy business practices instead of long term brand stability. 

If there was no high speed trading going on, stock values would only go up individually and you could safely invest in the stock market. However high speed trading results in everything listed on the NASDAQ, NYSE and TSX all moving in tandem to the same news (eg a certain president shooting his mouth off). At least if you buy a stock that has a dividend, the dividend pays predictable amount per month/quarter of the present value and even if it gains or loses value and the dividend only goes away if the stock loses so much money it has to take on debt to pay it.