Qualcomm Inc announced on Monday a plan aimed at a “major increase” in the companys capital return program.
The largest manufacturer of chips used in smartphones said its board has approved up to $15 billion for its new stock repurchase program. Qualcomm said that the program will replace its previous plan, which had $2.1 billion worth of share buybacks remaining.
The company intends to spent $10 billion over the next twelve months in line with the companys plan to increase delivered value for stockholders. The move comes as an addition to Qualcomms pledge to return to its investors at least 75% of the companys free cash via share repurchases and dividends.
Chief Executive Steve Mollenkopf said that the company exceeded all of its shareholder commitments in financial 2014 and returned 93% of free cash flow, or a record of $7.1 billion.
Mr. Mollenkopf also added that Qualcomm has delivered about $37 billion to its investors since 2003, when the company announced its first dividend of $0.05. At the time only Microsoft was sharing its capital with investors within the technology companies.
Qualcomm also said that it had returned $3.2 billion in stock repurchases and $697 million in cash dividends so far in fiscal 2015, which for the company started in October.
However, Qualcomm warned that the timing of the stock repurchases would be based on the companys evaluation of the prevailing market conditions and reserved the right to stop and continue the program without prior notice.
The company plans to implement an accelerated model of the program during the fiscal third quarter in order to distribute a portion of the overall size of the plan. Overall the program would be primarily financed by borrowings from the public debt markets this year.
Additionally, Qualcomm announced it would boost its dividend to $0.48 from $0.42 a share, effective March 25.
The company reported a solid performance for the first fiscal quarter ended December, boosted by the release of Apples iPhone 6 and iPhone 6 plus, but lowered its full-year revenue guidance as the majority of the smartphone makers feel the pressure of low-cost Chinese rivals.
“Today’s announcement represents an important step in returning that cash to our owners while still preserving the strategic flexibility needed to drive stockholder value through growth,” Mr. Mollenkopf said.
Qualcomm gained 1.68% on Monday and closed at $72.71 on the NASDAQ, marking a one-year decrease of 5.32%. The company is valued at $117.95 billion. The stock climbed 3.5% on Tuesday to $75.25 during pre-market trading.
According to the Financial Times, the 32 analysts offering 12-month price targets for Qualcomm have a median target of $75.50, with a high estimate of $88.00 and a low estimate of $50.00. The median estimate represents a 3.84% increase from the last closing price.
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