TriQuint Semiconductor, Inc. , an original equipment manufacturer (OEM) of semiconductor communication integrated circuits (ICs), has recently declared its stock buyback program to facilitate the purchase of its common stock through May 2, 2013. According to the program, TriQuint would be entitled to buy back up to $50 million worth of its common stock either in the open market or through negotiated purchases, depending on the existing market condition and other associated factors.
TriQuint intends to fund its share repurchases with its strong cash flow from operations and existing cash on its balance sheet. During the first quarter of 2012, TriQuint generated nearly $34.7 million cash from operating activities compared with $10.8 million in the prior-year quarter.
The buying back of common shares at a low price is likely to be one of the best strategic moves for the company. Besides, the share repurchase program will reduce the company’s number of shares outstanding, which is at 168.2 million (approximately) as of May 3, 2012.
TriQuint has a well-experienced management team offering a unique perspective to electronic communications system industry, such as mobile devices, networks and defense and aerospace industry. The company’s positive asset management policy has the ability to adapt to the changing market conditions for improving operating margins while boosting client experience.
However, the company should be aware of the competition existing in the industry as it consists of large players, such as DSP Group Inc (DSPG - Snapshot Report), Ikanos Comm Inc etc.
The current Zacks Consensus Estimate for both the second quarter of 2012 and for fiscal 2012 is a loss of 16 cents per share. The company currently retains a Zacks #5 Rank, which translates into a short-term “Strong Sell” rating. However, we are maintaining a Neutral recommendation on the stock.