Marvell

The company is pushing hard on share buybacks, announcing not one, but two initiatives.

Next-generation chipmaker Marvell Technology (MRVL 7.46%) announced two shareholder-pleasing measures on Wednesday, and the moves attracted investors to the stock. Collectively they pushed the company’s share price up by 7% in a trading session that saw the bellwether S&P 500 index sag by 0.3%.

Repurchase rally

This morning, Marvell announced that its board of directors has greenlighted a new share buyback program. It has authorized up to $5 billion in purchases of the company’s common stock, in an initiative that essentially refreshes an existing initiative. Marvell said that, as of Aug. 2, there was roughly $2 billion left under the authorization for that program.

Image source: Getty Images.

So far this quarter, the company added, it has bought back $300 million worth of stock.

Additionally, Marvell has entered into an accelerated share repurchase program to snap up $1 billion of common stock. It is doing this in collaboration with what it described as “a leading financial institution” it didn’t name.

Marvell CEO and chairman of the board Matt Murphy said in a statement the program “reflects our conviction in the business and the intrinsic value of our stock, as we drive sustained revenue and cash flow growth.”

Making hay while the sun shines

While there is usually some degree of corporate hype in such announcements, Marvell has genuinely been doing well lately. In its most recently reported quarter, revenue rose by 58% year over year to top $2 billion for the first time in company history. On the bottom line, across that stretch Marvell flipped to a headline net profit of almost $195 million, against the year-ago loss of more than $193 million.

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Marvell (NASDAQ: MRVL) reported significant increases in revenue and profit, but the stock price crashed following these announcements.

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Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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