It must be nice when you have to work hard at ways to spend an ever-growing pile of cash. Companies with high margins and strong cash flows tend to pile up greenbacks very quickly. Witness Microsoft's
Wireless technology innovator and cash machine Qualcomm
The board of directors of the $77 billion San Diego company approved the plan to supersede the current $2.5 billion buyback plan that still had $865 million available for share purchases. This expansion of its share-buyback plan builds upon the company's larger strategy of returning value to shareholders, which also includes a regular dividend that currently yields 1.2%.
On top of this, the company dedicates huge reserves to research and development, with R&D as a percentage of revenue averaging around 17% over the past couple of years. This high level of R&D spending, the increased share buyback, and a 30% dividend payout ratio all demonstrate Qualcomm's continued confidence that it will generate more than enough cash to fund business operations going forward.
The only real threats to the continued stream of cash flowing in to fund these perks are lawsuits and antitrust complaints pushed by Nokia
But with the $200 million that Qualcomm intends to spend on legal defense this year, the company is going to great lengths to ensure that it can keep giving back to shareholders.
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Fool contributor Dave Mock can think of many creative ways to spend $3 billion, including a custom private jumbo jet with a home theatre and hot tub. He owns shares of Qualcomm and is the author of The Qualcomm Equation. The Fool has a disclosure policy.