Current share price is about $20. So for the $6 billion you retire 300 million shares. There are about 5 billion total shares outstanding so you retire 6% of your shares.

Effective interest rate on the $6 billion in bonds is approx. 2.4%. The stocks dividend is 0.90 cents per share which equals a dividend yield of 4.6% .

Think of it as a small company where you own 94% of the company and a partner who has a 6% share of your company. You can take out a loan for $100k and pay 2.4% ($2,400 per year) to the bank. or keep paying him a dividend (his share of earnings) at $4,600 per year. Kind of a no-brainer in terms of immediate cash flow. Plus after 10 years when you've paid off the loan you now own 100% of your company.

When you think of it that way it's really a slam dunk for Intel.

For Intel, their cash flow for 2011 was approx. $20 billion so they can obviously afford to pay back the loan.

For Intel, debt is currently a less expensive way of capitalizing the company than equity. At 1-4% interest, Intel can borrow money through debt at a very cheap rate, but it is expensive for them to raise money through equity sales since their stock price is relatively low. Swapping debt for equity allows them to borrow money from the cheaper source without having to deplete their cash reserves.

Taxes. Intel can write off interest payments, whereas they can't write off dividends - if I am not mistaken.

Plus, there are other tax advantages to taking on debt.

Take it from the point of view of Earnings Per Share (EPS).

The company thinks that reducing the number of shares can be accomplished at a price that is low, and that the interest on the loan to reduce the shares won't lower EPS. The shareholders should be (nominally) happy, because they are getting an earning income stream that is going to be higher in the future.

Now as an aside: Corporations famously mistime buying back shares, and management is usually trying to feather their nest rather than deliver long term value, so they typically make poor decisions on buybacks.

Swapping debt for equity allows Intel to benefit from the interest tax shields from debt, which raises the enterprise value of the firm, assuming that default risk does not disproportionately rise.

Closing the company and returning money to shareholders (in the most extreme case + bankruptcy so taxpayer pick up the rest)