A few weeks ago, I detailed how investors should skip the funeral that everyone seemed to be planning for chip giant Intel (NASDAQ:INTC). Shares tanked after the company announced a delay to its 7nm product roadmap, yet quarterly results were still looking pretty good. In that article, I talked about Intel using its financial might moving forward, and this week the company did just that.
After the bell on Wednesday, Intel filed this 8-K report to announce that it had entered into a $10 billion share repurchase plan. The company had previously suspended its buyback plan during the height of the coronavirus, but with things stabilizing in recent months, I figured we'd see share repurchases return rather soon. Here is a key quote from the filing:
Intel believes that its common stock is at the time of this announcement trading well below intrinsic valuation, and that these repurchases are prudent at this time, given the strength of the company’s balance sheet.
Under the plan, Intel will receive 166 million shares initially, with the final number to be determined based on the volume-weighted price of the stock over the term of the agreement. The final settlement of this transaction is expected to be completed by the end of the year. Following completion of the accelerated plan, Intel will have repurchased a total of approximately $17.6 billion in shares as part of its ongoing $20 billion share repurchase program. As markets further stabilize, the company will return to more traditional share repurchases, likely in the open market.
As the company's 10-Q filing showed, Intel had just over 4.25 billion shares outstanding as of June 27th, which was the end of its fiscal Q2 period. This accelerated buyback will essentially reduce the share count by about 4%, continuing the substantial progress made in recent years seen below. If
