Intel (NASDAQ: INTC ) led the billion-dollar borrowers brigade with $6 billion spread over five-, 10-, 20-, and 30-year paper. The money's being used to fund a share buyback. Borrowing to buy shares may not seem like a smart move at first glance, but let's crunch some numbers.
Interest on the new debt: about $143 million per year
Dividend payout on $6 billion of Intel stock: about $268 million per year.
This deal nets Intel about $125 million a year in cash flow. Factor in taxes and consider future dividend increases, and the savings will get even bigger.
Intel Borrowing Big - Smart
Intel Saving Big - Smarter
Shorts Giving Back All Their Gains - Priceless
It would be even better if intel could get a grip on phones and pads. Hard to believe intel of all companies missed the first boat on low power. They should have been more focused. intel should be watching fads closer. The population these days are addicted to hand held devices that keep them in touch...or so they think, with their world.