Intel repurchased 122 million shares during the first quarter of 2009. In spite of the purchase, that was supposed to “return equity to the share holders", the basic number of shares outstanding increased during the first quarter by ten million.
Intel “used $2.5 billion to repurchase 122 million of its common shares" during the first quarter and distributed 132 million of its shares as bonuses to its administrators and employees. Intel reported income of $0.475 billions as “proceeds from sales of shares to employees, tax benefit & others”. An undisclosed part of this must have come from payment in return for the sale of the 132 million shares.
The cost of the 132 million shares that were distributed as bonus was $2.7 billion. The shareholders of Intel received $0.735 billion as dividend during the first quarter of 2008.
During the golden years of Intel, when management retained ownership of their shares of Intel, the ordinary shareholders were treated fairly (with stock dividend). Present management is noted by selling most of their Intel shares as soon they can. I believe that the poor performance of the shares of our investment in Intel is due to the recognition by the investment community that the management of Intel is unfair.
I noticed that during each presentation to the analyst Intel management is asked why the abundant “cash hoard” is not distributed to the shareholders. The response is always pointing to the enormous repurchase of shares.
Recent front-page article on the Wall Street Journal criticized corporation who retain unjustified level of cash and investment funds that should be used to benefit shareholders. Intel was one of the corporations listed as an example.
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