TI to buy back $7.5B in stock

Texas Instruments is buying back $7.5 billion in common stock to boost shareholder value.

$7B is a LOT for TI. Plus, spending cash to pump up it's stock price is not the same as "increasing shareholder value". But with this fascist regime, what else can they productively do with the money without risking future revenues or margins (expenses like higher corp and dividend taxes, exploding health care costs, onerous import/export/environmental regs, etc.)?

If they invested the cash to create long term innovations that brought in new sources of revenue or gave them a competitive edge, then that would be increasing shareholder value. A good example is Apple creating the first iPod, which led to their online music, then app store. They created a technical and product foundation that diversified their product lines and created derivative products like the iPhone and iPad.

But the board of directors has concluded the most sure way of passing on greater stock returns to shareholders without taxing it all away later is to execute a huge buyback. It's a real shame! TI is a very innovative company (I used to work there back is the early-mid 80's). This marxist is doing very long term damage to our few remaining star companies (planned) and the slack is being taken up by China.

"With trillions in cash companies are spending on SAVINGS rather than expansion - this is why there are no new jobs!!"

To TI's credit, over the last two years they have ramped-up a new State-Of-The-Art facility north of Dallas, but it's pretty hard to make money when nobody has any money to spend.

A defensive move at this point is very understandable.

The buybacks are the most rational use of capital right now given that TE is trading at only a bit more than 12x earnings. If profits remain constant, every dollar used for a buy back generates a nearly 8% return for stockholders. If the company expects growth when the economy recovers, that figure could be much higher.

Share repurchases are really a backdoor dividend that are more tax efficient. If a company has 100 shares outstanding, the profit must be divided into 100 “pieces”. If the firm repurchases 12 of those pieces, next year, the profit only has to be divided among 88 pieces. Over time, investors who hang on for the long-term are rewarded. If the company had instead sent the owners a check for that money in the form of a dividend, the IRS would tax it again, leaving less cash in the hands of the private market.

This has nothing to do with jobs. This has everything to do with requiring people who run a business to be accountable to the owners. That is why capitalism works.

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