Motorola announced Monday that it has finished one $4 billion stock repurchasing program–ahead of schedule–and will undertake another $4.5 billion buyback over the next 3 years.
On the news, Motorola’s stock jumped 3.5 percent Monday, closing at $21.12, up 72 cents.
News of completion of that buyback and announcement of another was “a pleasant surprise,” Ed Snyder, a stock analyst at Charter Equity Research, said. And it makes sense. “They are throwing off a lot of cash,” he said.
Investors generally cheer such buybacks, especially if the company is cash-rich. A buyback means a company’s profit will be spread out over fewer shares. Plus, analysts often see buybacks as a safer use of excess cash than making a large acquisition.
Motorola said it reached an agreement to buy about $1.2 billion of its shares, completing a $4 billion repurchase announced in May 2005, the first such program in the firm’s history.