Linear Technology Corp. (NASDAQ: LLTC) jumped in trading on Wednesday following an announcement that it would buy back $3 billion of its shares.

Proceeds from the $1.7 billion convertible bond offering announced yesterday will fund the repurchase, the company said. The semiconductor company's proposed buyback would equate to roughly 31 percent of the firm's market value.

Over the last twenty-five years we have built a strong profitable analog franchise, Robert H. Swanson, founder and Executive Chairman, said in a statement. We believe that our best investment continues to be ourselves, Linear Technology Corporation.

Nasdaq listed shares of Linear jumped $3.92, or 12.2 percent to $36.04.

Merrill Lynch analyst Joe Osha believes the rise in stock value makes sense. A lower share count improves the per-share-earnings, he wrote in a note to clients on Wednesday. However he warns investors that a change in capital structure doesn't affect the firm's growth prospects.

The only reason to own the stock would be to participate in the slow-motion buyout scenario, Osha stated.

The firm forecasts fourth-quarter revenue growth of 3 percent to 6 percent above the third quarter's $255 million.

Merrill Lynch