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Texas Instruments Hikes Dividend, Expands Share Buyback By $5 Bln

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2/21/2013 7:37 PM ET

Chipmaker Texas Instruments Inc. (TXN: Quote) said Thursday that its board of directors has authorized the purchase of an additional $5 billion of the company's common stock. In addition, the company hiked its quarterly dividend b 33 percent. The company noted that these increases reflect its ability to generate cash and its commitment to return the cash to shareholders.

Accordingly, Texas Instruments will increase its quarterly dividend to $0.28 per share from $0.21 per share. The new dividend is payable May 20 to shareholders of record on April 30. Annualized, the new dividend will be $1.12.

The company authorized the repurchase of an additional $5 billion of its common stock, bringing the total outstanding authorization to $8.4 billion. The company noted that common stock repurchases have reduced its outstanding shares by 36 percent since the end of 2004.

Texas Instruments makes chips used in phones, telecommunications equipments and calculators, making the company's earnings an indicator of demand across the economy.

According to the company, over the past few years, it has built a business model for growth and high margins with its focus on analog and embedded processing semiconductors. As a result, the company believes it can consistently convert 20-25 percent of its revenue into free cash flow and return 100 percent of that free cash flow, less debt repayment, to shareholders.

In late January, Texas Instruments said its fourth quarter profit declined 11 percent from last year, hurt by lower revenue and higher restructuring charges. At thsat time, the company also gave a downbeat outlook for the first quarter.

TXN closed Thursday's regular trading at $32.48, down $0.58 or 1.75 percent on a volume of 11.44 million shares. However, in after-hours, the stock gained $0.60 or 1.85 percent to $33.08.

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by RTT Staff Writer

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