TI increases share buyback by another $5B

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 9/21/2007

Dallas-based chipmaker Texas Instruments Inc. (TI) reported today that its board of directors has authorized the repurchase of an additional $5 billion of its common stock, bringing the board’s total stock repurchase authorization since September 2004 to $20 billion.

TI’s stock repurchases have lowered its shares outstanding by 17 percent through the end of Q2, with today’s authorization in addition to any outstanding authorizations, which totaled approximately $3.8 billion at the end of Q2.

The company also said it would raise its quarterly cash dividend 25 percent to 10 cents per share, resulting in annual dividend payments of 40 cents per share, and marking the fourth consecutive year of dividend increases for TI and the second increase just this year, the company reminded.

TI also noted that it has paid dividends to its shareholders on an uninterrupted basis since June 1, 1962 and expects the first quarterly distribution of the new dividend to be payable November 19, to stockholders of record on October 31, contingent upon formal declaration by the board of directors at its regular meeting in October.

Following the announcement, Lehman Brothers semiconductor research analyst Tim Luke released a report maintaining his “1-Overweight / Positive” rating on TI’s stock, meaning that TI’s stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon in a sector in which universe fundamentals are improving.

“We believe the announcement may suggest some confidence in the business outlook and may help bolster investor sentiment.  Despite longer term market share concerns in wireless, we believe near term trends remain healthy, with share gains in analog, and with modest valuation,” Luke said in the report.

“Near term, we believe Q3 is tracking at least in line with guidance of +6 percent quarter-over-quarter. Wireless trends appear somewhat mixed, with robust demand from Nokia, offset by still subdued (though potentially improving) Motorola and a transition at Sony Ericsson to use more STM with potentially heightened competition in Asia at the low end from Mediatek and Infineon.  We believe analog trends remain on track, with robust HPA growth in computing in particular.  We expect Q4 guidance to be broadly in line to better than expectations (we model revenues +2 percent quarter-over-quarter),” he added.