SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Intel Corporation (INTC)
INTC 40.01+1.7%Jan 6 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: GVTucker who wrote (151301)12/6/2001 1:07:08 PM
From: Saturn V  Read Replies (3) of 186894
 
Ref < Stock Repurchase >

The Stock repurchase plan is used to fund the following activities:

A. EMPLOYEE STOCK PARTICIPATION- partly an operational expense, but the expense is small since the stock is sold within six months to employees at slightly below market valuation during the period. However to call all of this an Expense as advocated by the the ALI CHEN SCHOOL OF ACCOUNTING is absurd.

B. EMPLOYEE STOCK OPTIONS- This is contentious. The company holds the stock and grants an option to the employee. The company loses the upside potential of the stock. A valuation of the option is contoversial since a market for such long term options does not exist.

C. ACQUISITIONS : Intel used its stock to buy Level 1 and some other companies. This stock came from the stock buy backs, and the shareholder was not diluted. The NextGen acquisition was clearly dilutive for the AMD share holders, since AMD did not repurchase any shares. Clearly use of repurchased stock for acquisitions is not an expense at all.

The present accounting systems do not know how to handle the cost of Employee Stock Options. However to count all of the Stock repurchase as an expense as advocated by one extreme individual is a gross absurdity.

However I do not like the idea of Stock Repurchases for a totally different reason. It implies that the company is maturing, has surplus cash, and does not have a good use for money, because it is not growing fast enough. The stock repurchase is like a dividend, except that it is less steady. Hot growth companies do not have dividends, do not repurchase stock, but continue to issue fresh shares and keep diluting the shareholders. The implication is that Intel is in a low growth mode, unless the networking and communication ventures take off.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News