Dear Elmer. Re: ”Their valuation is based on an assumption that when the cash flow increases their dividend will also goes up. What about share buybacks?”
The promise of share buybacks is the expected lowering of the number of shares outstanding. That increases the earning per share (EPS). In the past Intel used most of the buyback share to decrease the impact of incentive awards of new shares, therefore the impact of the buyback was minimal. Obviously shareholder do not benefit from an increase in cash flow unless their dividend is also increased. That explained why in the past huge buybacks did not significantly increase the EPS. It certainly did not increase the price of the INTC.
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