2 Techs Engineering Big Buybacks

04/13/2011 2:15 pm EST


David Fried

Editor, The Buyback Letter

Electronics powerhouse Vishay and chip-equipment supplier Novellus have backed bullish results with hefty share repurchases, writes David Fried of The Buyback Letter.

Vishay (VSH), a Fortune 1,000 company, is one of the world's largest manufacturers of discrete semiconductors (diodes, MOSFETs, and infrared optoelectronics) and passive electronic components (resistors, inductors, and capacitors).

These components are used in virtually all types of electronic devices and equipment, throughout the industrial, computing, automotive, consumer, telecommunications, military, aerospace, energy, and medical markets.

Though Vishay is headquartered in Pennsylvania, its global footprint includes manufacturing facilities in China and four other Asian countries, Israel, Europe, and the Americas, as well as sales offices around the world.

Vishay has grown through acquisitions to include such top names as Dale, Sfernice, Draloric, Sprague, Vitramon, Siliconix, General Semiconductor, BCcomponents, and Beyschlag. In July 2010, it spun off non-core businesses—so, Vishay Intertechnology is now a “pure play” electronic-components company.

In February, Vishay reported fourth-quarter results with a 9% upside surprise—earnings per share at 48 cents compared with the estimate of 44 cents. The company made just 16 cents a share in the year-ago quarter.

Revenue rose 13.4% to $688.6 million, from $607 million in the fourth quarter of 2009. The company's automotive customers boosted the quarter with strong demand for passive components in Europe.

The stock has more than doubled over the last year, and Vishay gave a bullish revenue outlook for the first quarter of 2011 of between $675 million and $715 million, which is similar to the levels of the fourth quarter.

Vishay has reduced shares outstanding by 11.6% in the last 12 months.

All’s Well for Novellus
Novellus Systems (NVLS), an S&P 500 company, is a top maker of equipment used to produce semiconductors.

The San Jose-based Novellus saw fourth-quarter profit more than double, with earnings posted at $81.5 million (89 cents per share), compared with a profit of $35.2 million (36 cents per share) in the same quarter last year. Revenue jumped 57% to $384.4 million, more than the $377.9 million analysts predicted.

Novellus said demand for personal computers remains strong, especially given the recent adoption of the new Windows 7 operating system from Microsoft (MSFT) and strong consumer demand in China.

A robust repurchaser over the years, Novellus has reduced its shares outstanding in the last 12 months by 7%.

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