NVIDIA Corporation (NVDA - Analyst Report) has extended its 2004 share repurchase plan and initiated a quarterly cash dividend.
The company had announced that it would extend its existing $2.7 billion share-repurchase program to December 2014. Under the existing program, Nvidia has so far bought back 90.9 million shares for $1,46 billion, representing an average share price of $16 per share. Thus the company is paying a premium of 30%-31% to its current share price.
The working capital will be used by the company for this repurchase. The company has a cash and cash equivalent balance of $3.4 billion.
In its fourth quarter 2013 guidance, the company also declared that it was initiating the payment of a quarterly cash dividend. Moreover, Nvidia took a step in the right direction last week. The company has taken a decision to initiate a quarterly dividend of 7.5 cents per share, and will extend the share repurchase authorization to the end of 2014.
The company expects revenue to be in the range of $1.025 billion and $1.175 billion. GAAP and non-GAAP gross margins are expected to be remain flat sequentially at 52.9% and 53.1%, respectively.
During the third quarter, the company witnessed strong demand for the company’s Kepler GPU products and shipments of new Kepler-based Tesla products improved sequentially.
On the other hand, NVIDIA’s performance may be slightly hampered by the economic slowdown in Europe. Moreover, advanced chips developed by Intel Corp. (INTC - Analyst Report) and Advanced Micro Devices Inc. (AMD - Analyst Report) may increase competition for the company.
Currently, NVIDIA has a Zacks #3 Rank (short-term Hold).