In a move to return cash to shareholders and boost its stock price, chip-maker Intel said Thursday it will increase its quarterly dividend...
SAN JOSE, Calif. — In a move to return cash to shareholders and boost its stock price, chip-maker Intel said Thursday it will increase its quarterly dividend by 25 percent and buy back up to $25 billion in common shares.
The dividend boost to 10 cents per share from 8 cents is a smaller increase than last year, when the company doubled the payout from 4 cents per share. The latest boost takes effect in the first quarter of 2006.
The stock buyback is a continuation of a program started in 1990.
Intel said it purchased more than 300 million shares for about $7.5 billion in the first three quarters of 2005, compared with $7.5 billion in repurchases for all of 2004. Since 1990, it has bought about 2.5 billion shares for about $49 billion.
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As of the end of the third quarter, about 313 million shares of stock remained available for repurchase under previous authorizations, representing about $7.8 billion in stock at the current stock price of $24.80. The new authorization of $25 billion in shares includes that $7.8 billion.
Intel CEO Paul Otellini said the chip maker’s investments in research and development as well as capital improvements have resulted in three years of double-digit percentage revenue growth.
“At the same time, we are returning record amounts of cash to our stockholders with one of the highest dividend yields in the technology industry and one of the largest share-buyback programs of any company,” he said.
In 2005, Intel expects to spend about $5.9 billion on capital projects and $5.2 billion on research and development. At the end of the third quarter, Intel reported having $11.95 billion in cash and short-term investments.
Intel shares rose to $25.24 in afternoon trading on the Nasdaq Stock Market. Its shares have traded in a 52-week range of $21.89 to $28.84.
Intel is the world’s largest supplier of microprocessors that power computer systems around the world, but it has struggled in recent years with some product missteps and fierce competition with rival Advanced Micro Devices.
Its financial and market positions remain strong. In the third quarter, which ended Oct. 1, it posted a $2 billion profit, or 32 cents per share, compared with $1.91 billion, or 30 cents a share, in the same time a year ago.
Sales jumped 18 percent to $9.96 billion from $8.47 billion in the year-ago period.