Key Moments
- Qualcomm announced a new $20 billion stock buyback program following a sharp decline in its share price.
- The new authorization is in addition to an existing $2.1 billion repurchase plan and comes alongside a quarterly dividend increase to $0.92 per share.
- The company continues to diversify beyond smartphones into data center and autonomous vehicle chip markets.
Expanded Capital Return Plan
March 17 (Reuters) – Qualcomm unveiled a $20 billion share repurchase authorization on Tuesday, moving to capitalize on a significant pullback in its stock that has been driven by a global memory supply crunch expected to weigh on handset production.
The company stated that this new buyback program will supplement its current $2.1 billion stock repurchase plan, rather than replace it. Qualcomm also reported that it is raising its quarterly cash dividend by more than 3 percent, lifting the payout to 92 cents per share from 89 cents.
“We remain focused on stockholder returns and executing on our ongoing diversification opportunities,” CEO Cristiano Amon said.
Market Reaction and Share Performance
Qualcomm shares gained more than 3% on Tuesday following the announcement. Despite that move higher, the stock has suffered a year-to-date decline of over 24%, as the widespread shortage of memory chips has affected its customer base, which consists largely of smartphone manufacturers.
| Metric | Detail |
|---|---|
| New stock buyback authorization | $20 billion |
| Existing stock buyback plan | $2.1 billion |
| Quarterly dividend (new) | $0.92 per share |
| Quarterly dividend (previous) | $0.89 per share |
| Share move on Tuesday | Up more than 3% |
| Year-to-date stock performance | Down over 24% |
Impact of Supply Constraints
The company’s recent share price weakness has been closely tied to the global shortage of memory chips. This supply disruption has affected Qualcomm’s customers, particularly smartphone makers, and is anticipated to slow handset manufacturing, contributing to pressure on the stock.
Strategic Diversification Efforts
Qualcomm is one of the world’s largest suppliers of smartphone chips and serves major Android manufacturers as well as iPhone-maker Apple. At the same time, the company has been actively broadening its business mix in an effort to lessen its reliance on the smartphone ecosystem.
As part of this strategy, Qualcomm has been working to expand into the data center chip segment and the autonomous vehicle market, targeting what it described as booming areas of demand beyond traditional handset applications.
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