Broadcom’s $10 billion buyback juices semiconductor stocks
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Chip designer Broadcom is up big in premarket trading after announcing a $10 billion stock buyback authorization Monday evening. This move appears to have buoyed the industry, as every member of the VanEck Semiconductor ETF but one is up at least 1% as of 8:05 a.m. ET.
CFO Kirsten Spears says this share repurchase program “reflects the Board’s confidence in our strong cash flow generation and allows us to deliver value to our stockholders.”
Shares of Broadcom are down 33% year to date as of Monday’s close, versus a 24% decline for the aforementioned semiconductor ETF.
The company has repurchased about $26.3 billion worth of its own stock since becoming publicly traded. While the full use of this authorization would be a massive ramp from its buybacks of less than $2 billion last year, it would still be smaller, as a share of market cap, relative to repurchases made in some prior years.
Broadcom’s board has authorized many a $10 billion buyback plan in recent years, but hasn’t actually exhausted that limit ever — likely because of how well the shares have performed.
