Intel (INTC) - Get Report has become the latest major company to ditch stock buybacks amid the coronavirus-driven downturn and a mounting political backlash against the stock-price-supporting practice.
In a Tuesday filing with the Securities and Exchange Commission, the semiconductor giant cited the Covid-19 pandemicfor its decision to suspend a $20 billion stock buyback plan in midstream.
Intel spent $7.6 billion to buy its own shares in the fourth quarter of 2019 and the first quarter of 2020.
But the chipmaker told federal securities regulators in an 8-K that it was "conservative" and "prudent" to shelve the rest of the stock repurchase plan "given uncertainty regarding the length and severity of the pandemic."
Intel said the decision to halt its stock buyback plan would not affect dividend payments to shareholders.
Intel joins Best Buy (BBY) - Get Report, Royal Dutch Shell (RDS.B) - Get Report, and several U.S. banks, including JP Morgan JPM and Bank of America (BAC) - Get Report, which have sworn off stock repurchases, at least temporarily.
While companies are seeking to preserve capital for other purposes in the midst of a major economic and financial crisis, the decision to put stock buybacks on ice also comes amid rising criticism in Washington.
President Donald Trump recently became the latest political leader to question the practice, saying last Friday he would support a provision that would ban companies that receive government bailout money from buying back their own shares.
A stock buyback reduces the number of shares that a company has outstanding and increases holders' stakes. A buyback can boost the company's stock price.
Intel also stated in the SEC filing that it has been able to keep its factories "operational" amid various health and safety measures and that it "continues to have a strong balance sheet."
Shares of Intel at last check rose 5.8% to $52.45.