Silicon Motion announces $50 million share buyback

TAIPEI, Taiwan and MILPITAS, Calif. - Silicon Motion Technology Corporation (NASDAQ:SIMO), a global leader in NAND flash controllers with a market capitalization of $1.83 billion, has initiated a new share repurchase program. According to InvestingPro analysis, the company appears slightly undervalued at its current trading price of $56.62, making the timing of this announcement particularly interesting. The company’s Board of Directors has authorized the repurchase of up to $50 million of its American Depositary Shares (ADSs) over the next six months, effective immediately.

This strategic move follows a year of significant growth for the company, with President & CEO Wallace Kou highlighting the successful diversification of their product portfolio and expansion into new markets, including enterprise solutions and various high-growth sectors. Kou expressed confidence in Silicon Motion’s long-term prospects and the company’s commitment to repurchasing shares, especially when market valuations may not fully reflect the company’s business strength.

The repurchase program will be conducted on the open market in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, considering market conditions, legal requirements, and other factors. The program does not require Silicon Motion to purchase a specific number of ADSs and may be suspended at the company’s discretion.

As of December 31, 2024, Silicon Motion reported approximately $334.3 million in cash, cash equivalents, restricted cash, and short-term investments. The repurchases will be funded using the company’s existing cash on hand.

Silicon Motion is recognized as the leading supplier of SSD controllers worldwide and a prominent merchant supplier of eMMC and UFS embedded storage controllers for smartphones, IoT devices, and other applications. The company serves a broad range of customers, including NAND flash vendors, storage device module makers, and OEMs.

Investors are advised that this announcement contains forward-looking statements subject to risks and uncertainties, including market trends and operational results that may differ from those projected. The company does not undertake any obligation to update or revise forward-looking statements beyond what is required by securities laws.

The information in this article is based on a press release statement from Silicon Motion Technology Corporation. For a comprehensive analysis of SIMO’s financial health, valuation metrics, and growth prospects, including 6 additional exclusive ProTips and detailed financial metrics, visit InvestingPro to access the full Pro Research Report.

In other recent news, Silicon Motion Technology Corporation has been under the investor’s lens due to various developments. The company recently announced that its fourth-quarter revenue is expected to land on the lower end of its previous guidance, between $191 million and $202 million. Additionally, its gross margin is anticipated to be around the midpoint of the previously forecasted range of 46.5% to 47.5%.

In addition to financial updates, Silicon Motion also reaffirmed its commitment to the quarterly cash dividend schedule. The company will continue to pay an annual dividend of US$2.00 per American Depositary Share, with the next installment scheduled for payment in February 2025.

On the analyst front, Needham maintained its Buy rating on Silicon Motion but reduced the price target to $70 from $75. This adjustment followed the company’s preliminary fourth-quarter results for 2024, which showed revenue at the lower end of expectations. Needham attributes this to weak consumer demand in the PC/SSD and smartphone markets.

Despite the current market challenges, Silicon Motion’s operational progress was noted positively. The company’s development and implementation of new PCIe Gen 5 and UFS 4 designs are reportedly progressing well. These are recent developments, and as always, investors are advised to consider these factors when evaluating the company’s statements about future performance.

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