Intel juices cash dividend (again)
Take that, Apple shareholders. Or don't
Intel is rolling in cash, and like all mature companies, it pays a dividend to reward its shareholders and to help boost its share price in a positive feedback loop that, in turn, helps it make more money. Intel has so much cash – even after shelling out a fortune to invest in its future 22-nanometer chip fabs – that on Wednesday it raised its dividend for the third time in five months.
Starting in the third quarter, Intel will kick up its quarterly dividend payout to 21 cents a share, an increase of 16 per cent. The dividend jump in January of this year was only seven-tenths of a per cent, to just over 18 cents a share, and followed a 15 per cent increase announced by Intel's board in November 2010, up from 15.75 cents per share.
That January 2011 juicing of quarterly cash payments to shareholders also came with an authorization by Intel's board to spend up to $10bn on share buybacks to help it engineer earnings-per-share growth and to have some shares to distribute to executives and other deserving employees as compensation. Intel has authorizations outstanding for $14.2bn in buybacks at the moment; it burned $4bn on its own shares in the first quarter and said that since it started doing buybacks in 1990, it has taken back 3.6 billion of its own shares at a cost of $74bn.
Intel shelled out $3.5bn for dividends in 2010, and since it started paying dividends in 1992 it has spent about $22bn.
Intel has also committed $8bn to build out development and manufacturing fabs for its 22nm wafer-baking processes. The shift to 22nm includes a new 3D transistor technology called Tri-Gate, which promises to make gate switching much more efficient and allows for future Core, Xeon, and Itanium processors to run a lot cooler at a given level of performance.
"Worldwide demand for computing continues to increase at a very rapid rate, putting Intel on track for revenue growth of over 20 percent this year, delivering another record year for the company," Paul Otellini, Intel's president and CEO, said in a statement announcing the divvy increase.
"Intel's current and projected growth is generating strong cash flow," he said, "allowing us to further increase our dividend. We are delivering on our commitment to return cash to shareholders with annual dividend growth that's already more than five times the S&P 500."
IBM has been paying dividends since 1916 and has been increasing the payout on a regular basis to keep shareholders interested – just two weeks ago to 75 cents per share per quarter. Networking giant Cisco Systems has finally started paying a dividend, too, but at 6 cents per share, it's pretty skinny.
But thus far, Apple, which has some $66bn in the bank, has decided to just sit on it, as if the company were some kind of startup. Considering how Apple has recast itself in the past decade, you could argue that it is, and Steve Jobs no doubt would argue just that. Intel's main chip rival, Advanced Micro Devices, does not pay a dividend– although upstart rival ARM Holdings does. ®
Intel showing it's great business sense for the most part
Larrabee .. couldn't compete as a discrete graphics card .. Intel smartly dropped that and is now using nVidia tech for GPU development .. well worth the $1.5 billion .. Intel continues focus on it's core business . nVidia on it's core business .. and AMD loses against both companies in CPU and GPU
McAfee .. jury still out .. however it's a good brand name, and McAfee tech *might* play out to be worth the $7.68 billion .. think it's a stretch for a company with a GAAP net income of $184 million, but certainly smarter than MS paying more for Skype, which loses money
Buy backs tells you a company is sound and expects to continue doing well .. the time to worry and be suspicious is when they are issuing / diluting stock to raise money
Intel .. in my estimation, is likely the smartest mature tech company in the world . both to consumers and it's shareholders .. a rare thing these days ..
Buy Backs! What next?? bring out the dancing bears (Dom-dom-dom-dom)
Larabee, McAfee, 3D chips, and buy backs - Intel is trying to not tell you something.