One Thing Texas Instruments, Inc. Does Right
While not as sexy as a disruptive technology or a hot new product, skillful capital allocation is among the most important strengths a company can have in building long-term shareholder value. It's the subject of William Thorndike's book on outstanding CEOs, The Outsiders, and also that of Warren Buffett's 1987 shareholder letter:
Most bosses rise to the top because they have excelled in an area such as marketing, production, engineering, administration or, sometimes, institutional politics. Once they become CEOs ... they now must make capital allocation decisions, a critical job that they may have never tackled and that is not easily mastered. ... The lack of skill that many CEOs have at capital allocation is no small matter: After ten years on the job, a CEO whose company annually retains earnings equal to 10% of net worth will have been responsible for the deployment of more than 60% of all the capital at work in the business.
One company with a management team that understands the importance of capital allocation is Texas Instruments (NASDAQ: TXN). In a rare act for public companies, Texas Instruments lays out its capital allocation strategy in a 40-slide presentation on its Investor Relations page. That transparency and discipline could be why the company has lasted 87 years, including more than six decades in the fast-changing semiconductor industry, with a 2.44% dividend that has grown 15-fold over the past decade. Here are all the ways Texas Instruments management does capital allocation right.
Source: Fool.com
Texas Instruments Inc. Aktie
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