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Just as your pulse is checked during a routine physical, free cash flow is used as an indicator of a company's health. It equals the cash brought in from operations minus the money needed to pay the bills. Think about leftover money in your checking account after you pay this month's bills.
Investors and analysts see this leftover money as a gauge of a company's ability to perform. It is available for transactions such as handing out dividends and working on new products.
Some argue free cash flow is wrongly overshadowed by the emphasis often placed on earnings. Earnings numbers can be manipulated and don't always tell the whole story -- and earnings don't mean much if there's nothing left over after a company pays its expenses. Even if you bring in a six-figure salary, but no money left after paying the bills, are you in great financial shape?
You don't have to be Einstein to figure out free cash flow. To calculate the number, subtract the company's expenditures and dividends from its operating cash flow.
If the free cash flow is written in red ink, it doesn't necessarily signal curtains. This is common for young companies looking to grow. It also could be a result of heavy investments, which in the long run could be worth a standing ovation.
Home / Markets / Industries / Technology
Tuesday, July 29, 2008
Linear Technology's Board of Directors Authorizes the Company to Purchase up to 20 Million Shares of Its Outstanding Common Stock in the Open Market Over the Next Two Years
Comtex
MILPITAS, Calif., Jul 29, 2008 (BUSINESS WIRE) ----Linear Technology Corporation (NASDAQ:LLTC), a leading, independent manufacturer of high performance linear integrated circuits, today announced that its Board of Directors authorized the Company to purchase up to 20 million shares of its outstanding common stock in the open market over the next two years. According to Lothar Maier, CEO, "The Company has had a meaningful stock purchase program including our Accelerated Share Repurchase transaction that was completed in January 2008 in which the Company purchased 83.3 million shares of its common stock. This current 20 million authorization will enable us to be active in the marketplace over the next two years including buying back shares to offset dilution from the Company's employee stock plans."
Linear Technology Corporation, a manufacturer of high performance linear integrated circuits, was founded in 1981, became a public company in 1986 and joined the S&P 500 index of major public companies in 2000. Linear Technology products include high performance amplifiers, comparators, voltage references, monolithic filters, linear regulators, DC-DC converters, battery chargers, data converters, communications interface circuits, RF signal conditioning circuits, uModule(TM) products, and many other analog functions. Applications for Linear Technology's high performance circuits include telecommunications, cellular telephones, networking products such as optical switches, notebook and desktop computers, computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, high-end consumer products such as digital cameras and MP3 players, complex medical devices, automotive electronics, factory automation, process control, and military and space systems. For more information, visit www.linear.com. For further information contact Paul Coghlan at Linear Technology Corporation, 1630 McCarthy Blvd., Milpitas, California 95035-7417, (408) 432-1900.
SOURCE: Linear Technology Corporation
Linear Technology Corporation Paul Coghlan, 408-432-1900 Vice President, Finance
Copyright Business Wire 2008
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