Texas Instruments to buy shares, boost dividend

NEW YORK (Reuters) - Wireless chip maker Texas Instruments Inc (TXN.N) said on Friday it expanded its share buyback program by $5 billion, or about 10 percent of its market capitalization, sending shares up 3.7 percent.

TI, which also makes calculators and television chips, also said it would raise its dividend by 25 percent, in the second such increase this year.

The company's board authorized the expansion of its repurchase program to $8.8 billion, or about 17 percent of its market capitalization of about $51 billion.

TI did not give a timeframe for the buyback but one analyst said the move would likely lead to faster share purchases.

"It does indicate they will be more aggressive going forward on buybacks," said Jefferies analyst John Lau. He has a buy rating on the stock and estimates that TI buys an average of $1 billion to $2 billion shares per quarter.

"This raises the profile of Texas Instruments as a solid growth company with increasing profitability. This is of great interest to the value investor," said Lau.

TI's head of investor relations Ron Slaymaker noted that the chip maker had boosted its buyback authorization by $5 billion twice last year, in September and earlier in the year.

"We believe that at current prices, our stock represents exceptional value. That's why we've been repurchasing as heavily as we have," Slaymaker said.

The increase in TI's buyback and dividend programs come as it resumes growth after being dogged by wireless industry inventory overloads last year and early this year.

Shares of TI rose as high as $37.10, before trading up $1.19, or 3.3 percent, at $36.96 on the New York Stock Exchange at mid-afternoon.

But TI's stock is still down from its year high of $39.63 on July 17 amid concerns about its growth outlook as its biggest customer Nokia Oyj (NOK1V.HE) has announced deals with rival chip suppliers for future phones.

The company had been the largest maker of cell phone chips but fell behind Qualcomm Inc (QCOM.O) in the first quarter, according to data from research company iSuppli.

TI said the latest move brings its total stock purchase authorization since September 2004 to $20 billion. Under these programs, it had reduced its shares outstanding by 17 percent, with roughly $11.2 billion in buybacks by the end of June, it said.

The company's market capitalization is now about $51 billion based on Friday's share price.

TI also promised a new quarterly dividend of 10 cents per share, bringing its annual dividend to 40 cents per share.

This was the fourth consecutive year of dividend increases, said TI, which has paid dividends since June 1962.

(Additional reporting by Tiffany Wu in New York and Jim Finkle in Boston)