11-07-2014, 11:48 AM
(11-07-2014, 11:23 AM)rapidacid Wrote: This article is just as relevant today as it was two years ago:
http://seekingalpha.com/article/694141-q...areholders
Quote:Qualcomm has $15 billion with which to buy back stock in this scenario. Let us assume then, that the company will buy back its shares at $60. We chose $60 because it is a conservative figure that accounts for a likely rise in the stock should Qualcomm announce a buyback. We quantify the effects of a buyback below.
Qualcomm Buyback Scenario
Initial Fiscal 2012 Shares Outstanding +1,759,987,422
Less Share Buyback ($15 billion @ $60 per Share) -250,000,000
Ending Fiscal 2012 Shares Outstanding 1,509,987,422
Old Net Income/EPS $6,599,954,708/$3.75
New Net Income/EPS $6,599,954,708/$4.37
Increase in EPS +$0.62 (+16.533%)
It's a good thought in theory, however QCOM hasn't shown any history of actually decreasing the share count with their buyback program. According to page 15 of their earnings presentation, the company has spent over $14 billion in share repurchases since 2010, however in looking at the share count from Morningstar, the number of shares outstanding has actually increased over that time frame, from roughly 1.65B to 1.7B.
I am long the company, and think its a good long term hold, but would rather see an increased payout ratio than more buybacks.