Qualcomm Rallies With Accelerated Buyback Plan

QUALCOMM, Inc. QCOM announced today that it was accelerating $5 billion of its share buyback plan, which it is funding via a recent $10 billion debt offering. In premarket trading, Qualcomm shares gained 1.7 percent to a last trade of $70.32.

The bonds that Qualcomm will offer have maturities between three and 30 years, with rates from 1.4 percent to 4.8 percent. Overall, Qualcomm will buy back up to $15 billion in stock, replacing a prior buyback program that had just $2.1 billion remaining. Within the next 12 months, the company aims to repurchase $10 billion in shares.

The share buybacks have not supported the stock, which is down 4.5 percent since the start of March. Investors are concerned that alongside the repurchase plan, Qualcomm also lowered its revenue and EPS forecasts.

Activist hedge fund Jana Partners is involved in Qualcomm, as well. The firm recently increased its stake to 28.5 million shares, or 11.5 percent of the fund's portfolio.

Notably, the hedge fund is pushing Qualcomm to separate its patent business from the core chip unit. However, the hedge fund said in early April that it was also pushing the company to reduce the size of its board and accelerate share repurchases.

Today's news may be the first indication that Jana's recommendations are taking hold in the company. Year to date, Qualcomm has shed 6.8 percent of its value compared to a 7 percent increase in the Nasdaq.