Intel's Gamble: $10B for Buybacks Rather Than Deals (INTC)

Intel Corporation (NASDAQ: INTC) is announced this morning that it was increasing its share repurchase program by a whopping $10 billion.  While this is a positive, it does raise some questions.

This places the share repurchases north of $14 billion.  This means that Intel would rather spend this capital on shares rather than on defending its processor business by getting deeper into smartphones where it currently lags.

Intel’s Infineon deal will get it more into the mobility market, but that is a story that will take place later in 2011 rather than sooner.

As reminder, buybacks are very controversial.  Barron’s just noted this weekend, “There’s scant evidence they do much for stock prices, other than produce small short-term pops.”  Some work well, some do not.

There is also news that Intel was raising its dividend to $0.18 but we first saw the dividend news back in November.

Intel shares are up 1.4% at $21.10 on about 9 million shares against a 52-week trading range of $17.60 to $243.7 in the first few minutes of the trading session this Monday.

JON C. OGG