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posted by martyb on Sunday October 27 2019, @06:25PM   Printer-friendly

"Intel today announced its board of directors has approved a $20 billion increase in its stock repurchase program authorization. In the third quarter, the company generated approximately $10.7 billion in cash from operations, paid dividends of $1.4 billion, and used $4.5 billion to repurchase 92 million shares of stock".

https://www.intc.com/files/doc_financials/2019/Q3/Q3-2019-Earnings-Release.pdf


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  • (Score: 4, Informative) by RandomFactor on Sunday October 27 2019, @08:17PM (6 children)

    by RandomFactor (3682) Subscriber Badge on Sunday October 27 2019, @08:17PM (#912517) Journal

    There are reasons for stock buybacks that can and do benefit shareholders in the short or long term.
     
    Most obviously it props up stock prices. That is obviously good for people with stock in the short term.
    It also reduces the company's float potentially reducing cost of capital, which can save a significant ongoing amount in a company of Intel's size.
    If the company thinks the stock is valued too low or that they are coming out with something that will dramatically increase its value it can be a good investment in and of itself.
     
    It can consolidate ownership which can streamline things by reducing the number of voices a company answers to.
     
    *cough* Also it, uh, may prop up certain financial metrics that are calculated into C* bonuses....

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  • (Score: 0) by Anonymous Coward on Sunday October 27 2019, @09:03PM (4 children)

    by Anonymous Coward on Sunday October 27 2019, @09:03PM (#912523)

    Also you are taxed on dividends in the period you receive them at a non-long term capital gain rate. When a company buys back shares the stock price benefits don't get taxed until you sell them and you can benefit from the lower long term capital gain tax if you hold over a year and you can strategically sell the shares when your tax rate is lower due to lower income.

    • (Score: 0) by Anonymous Coward on Sunday October 27 2019, @09:13PM

      by Anonymous Coward on Sunday October 27 2019, @09:13PM (#912525)

      So... gov meddling strikes again.

    • (Score: 0) by Anonymous Coward on Monday October 28 2019, @04:24AM (2 children)

      by Anonymous Coward on Monday October 28 2019, @04:24AM (#912643)

      Also you are taxed on dividends in the period you receive them at a non-long term capital gain rate

      If you have held the underlying for a few months, your dividends are "qualified", which means you pay long term capital gains rates on them. That government meddling has sweetened dividends by a whole lot since Baby Bush's government implemented that.

      What about the corporate tax normally payable on dividend payouts. Is buying back your own stock considered an expense?

      • (Score: 0) by Anonymous Coward on Monday October 28 2019, @12:35PM (1 child)

        by Anonymous Coward on Monday October 28 2019, @12:35PM (#912755)

        Thanks for that. I will talk to my accountant about this.

        • (Score: 0) by Anonymous Coward on Monday October 28 2019, @03:45PM

          by Anonymous Coward on Monday October 28 2019, @03:45PM (#912849)

          Update: I guess he already knows and has been taxing me accordingly. Just that when I spoke to him last he so over simplified that what he told me was essentially incorrect. Then today he says, well, the rules are more complicated than that, blah blah blah, but yes, you have been taxed correctly. I guess he's so busy he doesn't have time to correctly explain anything to me ....

  • (Score: 1, Interesting) by Anonymous Coward on Sunday October 27 2019, @09:25PM

    by Anonymous Coward on Sunday October 27 2019, @09:25PM (#912526)

    Lets say intc stays at 56 dollars a share

    20,000,000,000/56 ~= 357142857 shares

    Lets say their dividend stays at 1.26 That is 357142857*1.26 per year they 'keep' or about 449,999,999.82 lets call it 450 million :) so 20 billion div 450 milllion, or about 44 years to ROI on that. Or about 10-15 percent of their current dividend payout. As this has been increasing fairly rapidly over the past 10 years. They either increased their dividend a decent amount already or issued a bunch of debt disguised as shares recently. That they are not using it to wipe out their 29B in debt tells me that their debt must be very low to free to service (its not ~2.5 billion last year).

    Usually this is a stock prop up. Looks like it here too.