Last week, Atmel Corporation (ATML) announced another share repurchase authorization to buy back around $200 million of its own common stock. This marked an addition to the company’s existing $500 million common stock repurchase program.
The company has the option of conducting this buyback program either in the open market, through privately negotiated transactions or through certain other means. This, however, will be in accordance with market condition assessments and other related factors. There is no expiration date for this authorization.
Previously, Atmel had announced a $200 million repurchase program in August 2010 and another $300 million common stock repurchase program in May 2011, making the total repurchase authorization of $500 million. Currently, it has bought back common stock of around $489.4 million under the existing authorization.
It appears clear that Atmel considers retaining shareholders’ interests to be its top priority. However, it is also quite approbatory that the company is quite prescient about maintaining a hold on its capital and cash flow. During the first quarter of 2012, Atmel generated nearly $61 million cash from operating activities.
However, the company should not be complacent about its advances with regard to catering to investor interests. Atmel should remain conscious of competition within the industry as it consists of big players such as Mellanox Technologies, Ltd. (MLNX), FormFactor Inc. (FORM) and Cirrus Logic Inc. (CRUS) who continue to pose an ominous threat to the company.
The current Zacks Consensus Estimate for the second quarter of 2012 and for fiscal 2012 are 6 cents and 39 cents, respectively. The company currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. However, we presently maintain our Neutral recommendation on the stock.
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