Micron kicks off dividend payments, shifts to 'opportunistic' share buybacks
Reuters
Published Aug 02, 2021 04:39PM ET
Updated Aug 02, 2021 05:55PM ET
By Stephen Nellis
(Reuters) - Memory chip maker Micron Technology Inc (NASDAQ:MU) on Monday said it would shift how it returns cash to shareholders, buying up more shares when prices are low, fewer when prices are high and instituting a dividend for the first time.
Micron makes DRAM and NAND memory chips, which are needed for nearly all computing systems and whose price can fluctuate widely based on global supply and demand. This can cause swings in profits - and share prices - at most memory makers.
Micron on Monday said it would start adjusting its previously regular share repurchases - which have returned about $4 billion in cash to shareholders since 2018 - to match those cycles, holding back when prices are high so that it can retire more shares for each dollar spent.
"We're changing our buyback strategy to be more opportunistic," Micron Chief Financial Officer David Zinsner said during a conference call announcing the news.
Micron on Monday also declared an initial quarterly dividend of 10 cents per share, payable in cash on Oct. 18.
Capital return programs can be tough for memory companies to manage during the industry's boom-and-bust cycles.
Micron's largest two competitors for memory chips - Samsung Electronics (OTC:SSNLF) Co Ltd and SK Hynix Inc - both pay dividends to shareholders. Hynix cut its dividend in 2019 when profits plummeted at the bottom of an industry cycle.
Micron's changes to its capital return program come as the company is preparing to ramp up spending for a new generation of chips.
Micron in June said its capital expenditures for fiscal 2021 would rise above $9.5 billion, partly driven by pre-payments as it starts to acquire extreme ultraviolet lithography (EUV) machines from Dutch maker ASML Holding (NASDAQ:ASML) NV. The machines are necessary for making the most cutting-edge chips but can cost more than $100 million each.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.