Tags: AT&T

AT&T Dialing Up Profits with $15 Billion Buyback and Boosted Dividend

By , Money Morning •

By Jennifer Yousfi
Managing Editor

AT&T (T) announced yesterday (Tuesday) a substantial buyback plan of 400 million shares through the end of 2009 and a 12.7% increase of its quarterly dividend to 40 cents per share.

"This latest dividend increase, combined with the new share repurchase authorization, reflects the strength of AT&T's operations, and our board's confidence in the future of our business and our ability to continue to deliver strong results," Board Chairman and Chief Executive Officer Randall Stephenson said in a press release. "AT&T has great assets in a growth industry, and we're excited about the opportunities we have to continue to grow our business while also delivering value to shareowners."

AT&T's strong third-quarter profit growth was fueled in part by a profitable collaboration with Apple's iPhone that added 2 million wireless subscribers for the quarter. Additionally, iPhone users are twice as likely to purchase downloads and other Web-based services, reported Bloomberg.

Stock buybacks typically have a positive effect on share price and AT&T's announcement was no exception. AT&T rose 4.12% on the day of the announcement before closing at $39.46 per share.

Other companies to announce share buyback programs recently include:

  • Newly formed Thomas Cook Group plc (TCG) announced plans to seek approval for a stock repurchase plan worth 375 million euros ($550 million) based on stronger than expected profits for its fiscal year ending October 31, 2007.   "Both our current trading and our first operating result as Thomas Cook Group plc are very encouraging," Joint Chief Executive Manny Fontenla-Novoa said in a trading update released yesterday. The company's stock rose 6.77% for the day.
  • In mid-November, Cisco Systems, Inc. (CSCO) announced a $10 billion increase in its current share repurchase program. Cisco has never paid a dividend, preferring instead to return money to shareholders through stock buybacks, Bloomberg reported.
  • German automaker Daimler AG (DAI) announced the successful completion of the first stage of their stock repurchase plan representing 4.73% of outstanding shares valued at 3.48 billion euros ($5.10 billion). The buyback will resume after 2007 financial statements are verified. "In total, therefore, up to 10 percent of the outstanding shares will be bought back for up to 7.5 billion euros," the company said in a statement as Reuters reported.

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