03/02/2010
Bloomberg News – San Francisco Bureau
March 1 (Bloomberg) — Qualcomm Inc., the largest maker of mobile-phone chips, plans to buy back as much as $3 billion of its shares and will boost its dividend by 12 percent.
The program replaces a $2 billion buyback plan, which was recently completed with a $1.7 billion repurchase, San Diego- based Qualcomm said today in a statement. The quarterly dividend will now be 19 cents a share, up from 17 cents.
The company is trying to make its stock more attractive after a 23 percent slump this year made it the worst-performing technology issue in the S&P 500 Index. The shares dropped the most in almost a decade on Jan. 28 after Qualcomm lowered its 2010 revenue forecasts and predicted second-quarter profit that fell short of analysts’ estimates.
Even with the increased dividend and buyback plan, Qualcomm has more than enough cash to raise them further, according to a report by JPMorgan Chase & Co. analyst Steven O’Brien.
Qualcomm is one of the richest companies in the semiconductor industry, with more cash and equivalents than Intel Corp., the world’s largest chipmaker. It ended its most recent quarter with $18.9 billion in cash and marketable securities, up from $17.7 billion three months earlier. The company has used buybacks and dividends to return $12.6 billion to investors since 2003.
Qualcomm gets most of its profit from licensing technology used in mobile phones and phone systems. Its chips, which generate the majority of sales, are the key component in phones, translating radio signals into sound and data.
The planned $3 billion buyback represents 5 percent of the company’s current market value. The shares fell $1.12, or 3.1 percent, to $35.56 today in Nasdaq Stock Market trading, before the company announced the repurchase plan.
