Why Atmel Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Atmel  (UNKNOWN: ATML.DL  ) rose 14% during intraday trading Thursday after the company released mixed quarterly results but announced it has added an additional $300 million to its outstanding stock repurchase authorization.

So what: Quarterly net revenue fell 1% year over year to $356.3 million, which translated to adjusted net income of $37.7 million, or $0.09 per diluted share. For reference, analysts were modeling the same $0.09 adjusted earnings per share on slightly higher sales of $357.7 million.

However, largely thanks to the company's expectation of continuing to generate strong cash flow from operations going forward, Atmel also announced that its board of directors has authorized an additional $300 million to be added to its existing stock repurchase authorization, bringing the total amount to $1 billion.

Now what: For reference, Atmel repurchased roughly $4.6 million shares at roughly $7.52 per share during the third quarter, bringing its total repurchases since the second half of 2010 to $636 million.

Personally, I'd prefer Atmel give shareholders a little more freedom by offering a dividend, which would allow everybody to choose for themselves whether to reinvest. However, management made it clear during the subsequent earnings conference call that it continues to believe buybacks are the way to go. Still, in lieu of adequate earnings appreciation or finding ways to effectively reinvest in growing its business, grappling with the best methods to deploy all its excess cash is an enviable problem for Atmel to have.

In the end, while I won't be buying shares of Atmel anytime soon, I can't blame the market for bidding the price up today.

You can buy and hold these three stocks forever
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal "The Motley Fool's 3 Stocks to Own Forever." These picks are free today! Just click here now to uncover the three companies we love. 

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2708541, ~/Articles/ArticleHandler.aspx, 9/30/2016 9:30:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 14 minutes ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
ATML.DL $0.00 Down +0.00 +0.00%
Atmel CAPS Rating: ***