David Fried focuses exclusively on stocks that are undergoing buyback or share repurchase programs. In this latest The Buyback Letter, he highlights two new ideas, both in the technology sector.
Brocade Communication (BRCD) is the San Jose, California-based maker of switches and routers that big companies use in their own data centers and server rooms. We last bought and sold it in 2008.
Brocade recently made a $1.5 billion deal to acquire wireless Internet supplier Ruckus Wireless (RKUS), which will allow them to offer complementary products and services in wireless mobile, data storage, and data center networking.
Ruckus' strength in the Wi-Fi market should also help Brocade's efforts to grow its Internet of Things market, its 5G mobile services, and smart cities -- all which have huge potential upsides as the world matures into a digital, data-driven marketplace.
Brocade beat analyst estimates for both revenue and earnings in its fiscal 1st quarter report earlier this year. Its business outlook was in line with analyst expectations and suggested more growth ahead.
Brocade also announced that it has increased its stock repurchase program by $800 million, bringing it to a total of $1.7 billion. Management has reduced its shares outstanding by about 5% in the past 12 months.
Cypress Semiconductor (CY) develops and manufactures a wide range of high-performance digital and mixed-signal integrated circuits.
Cypress makes these products for industries such as data communications, telecom, computers, and instrumentation systems, ranging from auto, industrial and networking platforms to interactive consumer and mobile devices.
Cypress introduced 12 new products in the last quarter, mostly in targeted automotive and industrial markets.
CEO T.J. Rogers pledged the company will continue to return capital to shareholders through dividends (5.02%) and stock repurchases, while at the same time improving its leadership in growth markets.
Sales are global, with Japan representing 29%, Europe 15%, the Americas 16% and China/rest-of-world 41% of sales. CY has reduced shares outstanding by 6.31% in the past 12 months.
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By David Fried, Editor of The Buyback Letter
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