Intel Announces Share Buyback Plans; Shares Rise After Hours

Amid macroeconomic headwinds and a damaging product misstep, Intel moves to shore up investor confidence.
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Intel shares rose in after-hours trading on Wednesday after the chip giant announced a share repurchase program.

Shares of Intel  (INTC) - Get Report were up 3.6% in after-hours trading after the company announced a plan to buy back an aggregate of $10 billion of Intel’s common stock. 

"We achieved record financial results in the first half of 2020 and raised our full-year outlook as customers rely on Intel technology for delivering critical services and enabling people to work, learn and stay connected," said Intel CEO Bob Swan in a statement. 

"As the ongoing growth of data fuels demand for Intel products to process, move and store, we are confident in our multiyear plan to deliver leadership products. While the macro-economic environment remains uncertain, Intel shares are currently trading well below our intrinsic valuation, and we believe these repurchases are prudent at this time," Swan said. 

Intel is funding the buybacks with existing cash reserves, the company said. 

Shares of Intel are down about 20% year to date amid poor macroeconomic conditions, as well as product missteps. 

In late July, Intel shares took a dive after the company said that its forthcoming 7-nanometer processors, viewed as key to its ability to compete with market-leading rivals, were six months behind schedule and that it may have to seek outside help. 

Wall Street analysts speculated that Intel's delayed 7nm technology will allow competitors such as AMD  (AMD) - Get Report to gain a stronger foothold. 

"The largest driver of our Sell rating has been Intel falling at least a node behind in manufacturing lithographies, which has allowed AMD to gain market share with its latest family of architectures," wrote Loop Capital's Cody Acree in July. "We believe this thesis is playing out as expected, with some evidence being obscured by the impact of the coronavirus."