Re: stock buyback...
Seeing a lot of talk about stock buyback; just thought I'd
weigh in on the rather underrepresented side against the idea:
Just my opinion, but I don't think a stock buyback would be a good
move for fore right now. they are still a small young company
who needs all the cash it can get to invest in its future (and
by "invest" I mean building infrastructure, hiring employees,
starting new projects, I don't mean stock investing!).
To me, a stock buyback is most appropriate for more mature companies
that no longer expect high growth rates, for highly successful large
companies with more cash than they know what to do with
within the framework of even the most aggressive biz plans (i.e. IBM),
or for companies with enough employees such that their stock purchase
plans or options plans can be dilutive. In all other cases, one
should usually be able to think of something better to do with
the money instead of buying stock.
I may, however, be in favor of a small token buyback (no more than
a few million dollars worth), that in no way, shape or form could
even possibly materially affect the business plan of the company.
Such a buyback would have the sole purpose of communicating a vote
of confidence to the investor community.
But for fore to initiate a buyback because (a) it's "a good investment"
or (b) "need something to do with our money" is a bad idea, IMO.
Either one would be a red flag that mgmt doesn't know
how to grow a young company.
if fore announced a sizable buyback, I think I would sell on any
short-term lift in price following such an announcement.
Just my three cents,
DOM |
