(NVDA) NVIDIA Extends Share Repurchase Plan

NVIDIA Corporation (NVDA) has extended its 2004 share repurchase plan and initiated a quarterly cash dividend.

The company had announced that it would extend its existing $2.7 billion share-repurchase program to December 2014. Under the existing program, Nvidia has so far bought back 90.9 million shares for $1,46 billion, representing an average share price of $16 per share. Thus the company is paying a premium of 30%-31% to its current share price.

The working capital will be used by the company for this repurchase. The company has a cash and cash equivalent balance of $3.4 billion.

In its fourth quarter 2013 guidance, the company also declared that it was initiating the payment of a quarterly cash dividend. Moreover, Nvidia took a step in the right direction last week. The company has taken a decision to initiate a quarterly dividend of 7.5 cents per share, and will extend the share repurchase authorization to the end of 2014.

The company expects revenue to be in the range of $1.025 billion and $1.175 billion. GAAP and non-GAAP gross margins are expected to be remain flat sequentially at 52.9% and 53.1%, respectively.

During the third quarter, the company witnessed strong demand for the company’s Kepler GPU products and shipments of new Kepler-based Tesla products improved sequentially.

On the other hand, NVIDIA’s performance may be slightly hampered by the economic slowdown in Europe. Moreover, advanced chips developed by Intel Corp. (INTC) and Advanced Micro Devices Inc. (AMD) may increase competition for the company.

Currently, NVIDIA has a Zacks #3 Rank (short-term Hold).

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