Market Overview

Qualcomm Announces $4 billion Stock Buyback and 16% Dividend Increase

Mobile phone fabless semiconductor producer Qualcomm (Nasdaq: QCOM) announced a $4 billion stock repurchase program on Tuesday morning. The company also said that it would increase the dividend that it pays to its shareholders by 16 percent to 25 cents per share, up from the previous dividend of 21.5 cents.

Qualcomm Chairman and CEO Dr. Paul E. Jacobs said that his company's "business model continues to drive strong cash flows, enabling investments in our key business initiatives while we continue to return capital to stockholders."

Qualcomm generates huge amounts of cash because in it is own words, "Qualcomm has become the undisputed world leader in the intellectual property—patents—that provide the basis for 3G wireless technology."

The company earns billions of dollars from royalties that it receives from other companies that use Qualcomm's Code Division Multiple Access (CDMA) technology in their products. Qualcomm has profited from the growing demand in the United States and internationally for smartphones made by companies like Apple (NASDAQ: AAPL).

The company seems to have more cash than it knows what to do with, so it has often returned profits to its shareholders through stock buybacks and cash dividends.

The company's latest $4 billion stock repurchasing program has no expiration date and replaces the previous $3 billion stock buyback plan, which had $948 million of repurchase authority left.

The $4 billion stock repurchasing plan is in addition to $16.8 billion that Qualcomm has returned to its shareholders since 2003 through its stock repurchasing programs and cash dividends.

Trading in Qualcomm shares is heavy today, with more than double the average daily volume of 6 million shares already being traded before noon in New York.

Despite the positive news that the Qualcomm was returning more than $4 billion to shareholders through a stock buyback and an increased dividend, the company's shares were down along with the broader market because of concerns related to Greece and the global economy.

Qualcomm's stock price was down 0.89% at $61.56 per share at the time that this article was written. Qualcomm has a price to earnings ratio of 22.28 and a market cap of $104 billion.

Posted-In: CDMA Code Division Multiple Access Paul E. JacobsNews Dividends Buybacks Events Movers Tech Best of Benzinga

 

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