What Happened?
Shares of semiconductor designer Lattice Semiconductor (NASDAQ:LSCC) jumped 7.4% in the afternoon session after the Board of Directors approved a plan for the company to repurchase $100 million more in common stock, showing management's commitment to returning value to shareholders. Since late 2020, Lattice has bought back around 6 million shares, reducing share dilution by 4.3%.
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What The Market Is Telling Us
Lattice Semiconductor’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 7.8% after Bloomberg reported that the company is making an offer for Intel's Altera business, which is a direct competitor in the field-programmable gate arrays (FPGAs) market. With Lattice's valuation at approximately $7.5 billion—compared to the $17 billion Intel paid for Altera—there are indications that the deal may require additional parties such as private equity and complex structuring to enable Lattice to do the deal.
Lattice's stock reaction suggests the market sees the benefits of a potential deal. Lattice creates field-programmable gate arrays (FPGAs) and other specialized chips, directly competing with Altera's offerings. Acquiring Altera would complement Lattice's design and manufacturing capabilities, creating a stronger combined entity. In addition, the acquisition would significantly expand Lattice's market share and global reach, improving the company's rank in the semiconductor industry. Lastly, the deal would eliminate a key competitor.
Lattice Semiconductor is down 11.3% since the beginning of the year, and at $60.63 per share, it is trading 27.5% below its 52-week high of $83.57 from March 2024. Investors who bought $1,000 worth of Lattice Semiconductor’s shares 5 years ago would now be looking at an investment worth $3,197.
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