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It looks as if Intel (INTC +1.3%) again plans to issue debt to finance stock buybacks: the chip...

It looks as if Intel (INTC +1.3%) again plans to issue debt to finance stock buybacks: the chip giant says it will make a senior notes offering of undisclosed size, and intends to use the proceeds "for general corporate purposes and to repurchase shares." Extremely low interest rates and a stock trading near its 52-week low both act as incentives. Intel had $7.16B of debt on its balance sheet as of Sep. 28, and $14.9B in cash and investments. (2011 debt offering)
Comments (12)
  • wigit5
    , contributor
    Comments (3968) | Send Message
     
    A company buying back stock at it's lows? I need to take a picture.
    4 Dec 2012, 09:58 AM Reply Like
  • chopchop0
    , contributor
    Comments (3138) | Send Message
     
    The problem is, INTC has been carving out new lows for months
    4 Dec 2012, 10:47 AM Reply Like
  • wigit5
    , contributor
    Comments (3968) | Send Message
     
    agreed, but with Apple's new mac's getting good reviews and hopefully Win 8 sales will pick up as more people get comfortable with it things will improve. I don't see INTC hitting below $17 we are near a bottom I think for them unless neither MSFT nor Apple's intel run pc's sell then they need to start leasing out their production capacity or who knows what will happen.
    4 Dec 2012, 10:53 AM Reply Like
  • RM13
    , contributor
    Comments (712) | Send Message
     
    This is a good business strategy. Issue debt at inflation rate, buy stock back, sell it/issue it when price even minimally recovers.
    4 Dec 2012, 10:05 AM Reply Like
  • Albert Alfonso
    , contributor
    Comments (1360) | Send Message
     
    These bonds will yield less than the stock no doubt.
    4 Dec 2012, 10:28 AM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8821) | Send Message
     
    Oh, wow, Intel buying back stock? Geez, but I thought this was a dying company with no future?

     

    Once Intel's back at $25+, people will be singing its praises. That's just how the market works.
    4 Dec 2012, 11:09 AM Reply Like
  • ephud
    , contributor
    Comments (2216) | Send Message
     
    This makes very good business sense imo. The retired dividend covers the cost of the debt and the interest payments are a business expense when the dividend payments weren't. Free cashflow goes up, earnings per share goes up. What's not to love here?
    4 Dec 2012, 11:24 AM Reply Like
  • bbro
    , contributor
    Comments (9327) | Send Message
     
    Issue debt at ??? buy stock with a 4.5% dividend...going to be way below 4.5%...do that all day long...
    4 Dec 2012, 12:03 PM Reply Like
  • TwistTie
    , contributor
    Comments (2477) | Send Message
     
    I bought a few more shares yesterday.

     

    It looks like I am in good company.

     

    I told my wife I wanted to mortgage the house to buy shares in companies like Intel that have gotten the stuffing kicked out of them.

     

    She wouldn't buy it.
    
    4 Dec 2012, 12:10 PM Reply Like
  • westcoastinvests
    , contributor
    Comments (46) | Send Message
     
    While not ground breaking news this is basically the first good news INTC has had in months
    4 Dec 2012, 12:18 PM Reply Like
  • MexCom
    , contributor
    Comments (3050) | Send Message
     
    Its totally logical to do this. The savings in dividend payments will more that offset the interest to be paid on these bonds. A double down on boosting stockholder equity. Buying the stock over the bonds is the thing to do.
    4 Dec 2012, 04:15 PM Reply Like
  • FrankArabia
    , contributor
    Comments (407) | Send Message
     
    yupe.....interest are (3-4%) paid with before tax dollars, dividends at 4.5% are paid after tax....doesn't take much financial engineering to show you its accretive to book value immediately....

     

    funny thing is, the bond guys are willing to lend at below div yields on unsecured debt.......
    4 Dec 2012, 05:17 PM Reply Like
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