AMD Announces $4 Billion Share Repurchase Program

Discussion in 'Frontpage news' started by Loobyluggs, May 20, 2021.

  1. Loobyluggs

    Loobyluggs Ancient Guru

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    https://ir.amd.com/news-events/pres...-announces-4-billion-share-repurchase-program

    Good news for investors - great news for fellow gurus?

    For those that do not know, shares are issued by companies that can then be bought and sold on the stock market. When a company increases the amount of shares by issuing them, the value of the shares is reduced, because there are simply more shares in existence. When a company buys shares back by repurchasing them, it increase the value of the shares.

    The way to look at it is, the company has very high confidence in the future, has a lot of cheap cash available via loans (not investors) and has issued a lot of shares in the past...and the profits they expect to make in the future, they do NOT want to share with share holders :) They want that money for themselves.

    Those that hold onto the shares will get less profit share (all profits go to shareholders) but, will get higher value of the shares, as the share price will increase if there are less shares in existence.

    It's very simple.

    From a technical perspective, intel and nvidia have been slacking off, and AMD have just rolled up their sleeves and figured out where intel will fail (which as I understand it: the design of intel chips ceases to be efficient below a certain size 10nm? 11nm? 12nm?) and are now about to reap the rewards significantly.

    $4bn share buy back is very high. That's Star Wars money.
     
  2. anticupidon

    anticupidon Ancient Guru

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    So, invest?
     
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  3. Noisiv

    Noisiv Ancient Guru

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    Is this even legal -> announcing a buyback without specifying a period.

    PS
    stock buybacks - that's where your jobs went. instead of investing in growth and R&D lets do some gambling. considered illegal until 1982.
    CEOs love it.
     
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  4. Brit90

    Brit90 Member Guru

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    The companies now make more money with the buyback stock.
    I can't find a youtube link - but this is the only link I found with AOC explaining it -5 minutes -

    https://www.facebook.com/AOCFans/vi...from-illegal-pyramid-schemes/367738077180619/
    She explains it incredibly well.
     
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  5. Brasky

    Brasky Ancient Guru

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  6. Loobyluggs

    Loobyluggs Ancient Guru

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    They did specify a period - "This repurchase program has no termination date and may be suspended or discontinued at any time.".

    So, they are going to be buying back $4bn of stock. They announced it, and if they wish to change the process, they will notify everyone.
     
  7. Noisiv

    Noisiv Ancient Guru

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    They did not specify over which period they are going to purchase $4B of their stocks.

    For all they told us - it might be over 20 years, in which case it means nothing other than being misleading. Is why I am asking if that's even legal.
     
  8. Loobyluggs

    Loobyluggs Ancient Guru

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    Well, you need to make an announcement, clearly laying out where the money is coming from and what your intentions are. In this case, the cash to do this is from the sources they named and listed - this cannot therefore be considered to be misleading investors (purchases of stock) or shareholders.

    The date is open, but providing an open date is the same as giving a date, as the source of the money is defined to commit to it.

    In other words, the company will make decisions on the timing, depending on the performance of the company.
     
  9. Noisiv

    Noisiv Ancient Guru

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    Of course it's misleading if they're announcing to purchase $4B, while failing to disclose it's over 20 years. They are signaling confidence and willingness to invest resources. While in reality having very little skin in the game, because of undisclosed period.

    Furthermore I've never heard of buyback announcement which does not specify a buy-back period. There are whole hosts of issues why buy-back period needs to be specified.

    Not that I know how these things are regulated. It could very well be legal, and if it is - it's just another loophole to play.
     
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  10. Loobyluggs

    Loobyluggs Ancient Guru

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    Nah, I think they're okay with this announcement. It all looks and sounds perfectly sound and reasonable, with plenty of disclaimers and 'cautionary statements' about what is going on.

    Also, shareholder approved overwhelmingly in the purchase of Xilinx, which is one of those pieces of news that you kind of forget about, but at the time was pretty significant.
     

  11. Clouseau

    Clouseau Ancient Guru

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    If this was illegal, the SEC would have been all over them. That being said, the simple way to look at all this is that offerings are the only time the issuing organization receives any funds. So buy backs are just the organization paying back the loan. It also allows the organization to offer the stock that was bought back as purchase options to executives and such. They can also be held for when additional funds are needed from investors that are satisfied with a stake in the company as collateral. Having a buy back window is not necessary. Just an announcement signifying their intent if the plan meets certain requirements. If the intent was to go private again, that would need to be disclosed as the goal of the buy back plan. Otherwise all that is needed is the amount of the buy back. The greater the percentage of the buy back is of the outstanding stocks, the greater amount of information that needs to be disclosed.
     
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  12. RED.Misfit

    RED.Misfit Active Member

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    They're just trying to stop the dilution, a dilution that will increase when Xilinx is acquired.
    Coming from 700 millions shares years ago and talling to around 1,7 billion shares at years' end. They used the dilution to finance themselves (and also to acquire Xilinx with share trade only) and today it is not required anymore for company investment, they can invest what they got on free cash flow and the debt is minimal compared to that.
    If they don't stop it, value per shareholder will lessen. And the only thing they can do to stop that is a repurchase program to deflat the total number of share.
    They don't do dividend and they have to keep shareholder "happy". The stock price is on a negative momentum since the beginning of the year, even if the results are stellar.
     
    Last edited: May 21, 2021
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  13. Valken

    Valken Ancient Guru

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    In other words, BUY AMD. NOW. with your pillow, mattress or sock money.
     
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  14. Noisiv

    Noisiv Ancient Guru

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    Referring to SEC authority is a pretty convincing argument why it might be legal. Though not why it makes sense to leave the buy-back period unspecified.

    https://www.journalofaccountancy.com/issues/1999/may/mccarthy.html


    Assuming no pending developments prevent a buyback and the company's legal counsel gives its blessing, the next step for the executive administering the program is to get board authorization for it. That authorization should state both a dollar or share purchase limit and a time frame—for example; $5 million over one year, 3% of shares outstanding over the next six months or a half million shares before year-end. After the board makes its decision, the company should issue a press release detailing the program.
     
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  15. Clouseau

    Clouseau Ancient Guru

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    The only reason a timeline is included is that it makes the terms of the program finite, not open ended. The important aspect of the buy back is the per share price range that is willing to be paid to accomplish the task. The board has only given permission to buy back so much within a particular price range. The timeline is only there so the program does not last forever. If the price per share never hits the range authorized by the board, nothing is repurchased but the amount of cash needed to fulfill the goal remains restricted for the entire length of the program. The specified timeline is there to highlight how long the company is willing to restrict the amount of cash needed to accomplish repurchasing the maximum volume of shares. Restricted cash for any purpose is disclosed on the financials along with why the cash is restricted. The timeline is presented to state when the company is allowed to have access to that cash again, for other purposes, if any remains unspent. There is nothing preventing the program from being terminated before the deadline regardless of the volume that has been repurchased. All that is required is a press release essentially stating that the program was terminated early.
     

  16. Loobyluggs

    Loobyluggs Ancient Guru

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    I really think you are grasping here - that was written in 1999.

    They have told and announced what they are doing and I see nothing wrong with that, as the time limit is not the thing to be of note.
     
  17. Noisiv

    Noisiv Ancient Guru

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    If by grasping you mean desperately trying to prove a point - then Your Theory that there was plenty of wrong with it before, then suddenly, somewhere past 1999, there was NOTHING wrong with it - is a textbook example of grasping.

    OTOH if conceding several times like I have, is grasping:

    so be it ;).
     
  18. Loobyluggs

    Loobyluggs Ancient Guru

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    Sorry, but your posts were not clear enough.

    If you have not stated it before, please restate what you are saying: Are you saying it is legal or not?

    I say it is legal and there is nothing in any attempt to say it isn't. What say you?
     
  19. Noisiv

    Noisiv Ancient Guru

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    I am saying that while it's bleeding obvious that not specifying the buy-back period should not be legal, most likely it is.
    I am guessing that the reason why it might be legal is that no sane company would announce a buyback without specifying the timeline

    Which is the reason for me responding to this thread originally: Too many lawyers and too few SEC executives here :D
    While I'm trying to have a conversation, you think you're in court.
    Therefore If something was unclear ask the said court to provide you with the stenograph record. Or just read the thread again.
     
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  20. Airbud

    Airbud Master Guru

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