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Qualcomm Returns Value to Shareholders, Buys Back $16 Billion


Sep. 20 2018, Published 8:49 a.m. ET

Qualcomm announces share repurchase program

US chip maker Qualcomm (QCOM) recently announced the accelerated buyback of $16 billion worth of its common stock from banks as part of the $30 billion stock repurchase program it announced on its fiscal third-quarter earnings call.

The company has partnered with banks such as Bank of America, Morgan Stanley, and Citibank, a subsidiary of Citigroup (C), to facilitate the share buyback program.

Of the $16 billion, Qualcomm is initially planning to repurchase ~178 million shares by utilizing its available cash resources. The company expects to complete the majority of the total $30 billion worth of share repurchases by the end of fiscal 2019.

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Qualcomm to return value to its shareholders amid failed NXP merger

Qualcomm’s $30 billion stock buyback program was announced on July 26 as the company’s management sought to compensate its investors through share repurchases after a failed merger with NXP Semiconductors (NXPI), which was an attempt to capitalize on the booming automotive semiconductor and IoT (Internet of Things) markets. The company terminated its NXPI merger of $44 billion because the deal was facing opposition by Chinese regulators.

Qualcomm, which also recently escaped a hostile takeover attempt by Broadcom (AVGO), is one of the largest manufacturers of wireless chips and has a strong foothold in areas such as healthcare, server and PC processors, networking, and mobile technology. Qualcomm has also started working with Verizon Communications (VZ) to develop 5G (fifth-generation) NR (New Radio) mmWave technology.

However, Qualcomm is facing 5G competition from Intel in its licensing business. Qualcomm’s long legal dispute with iPhone maker Apple has significantly disrupted Qualcomm’s revenue.

The company’s massive stock repurchase program has been driving its stock price and boosting its EPS amid sluggish revenue growth. On September 19, Qualcomm stock had risen nearly 19% year-to-date, and it closed at $74.06.


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