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Technology Stocks : Network Associates (NET)

NET 195.54

-0.5%

2:45 PM EST

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To: Edwarda who wrote (5380)	6/20/1999 12:57:00 PM
From: Chuzzlewit	Read Replies (1) of 6021

Edwarda, I am certain that the motive you gave is the one that many CFOs have and truly believe. I simply raise the ethical question because the practice necessarily pits management against shareholders. I look at it this way: if management is buying stock based on its assessment that the stock is undervalued it is taking advantage of shareholders who are not privy to the same information. Thus, it is benefiting certain shareholders to the detriment of others. Secondly, I have a hard time viewing a one-time share repurchase as "investing" in any economic sense of the word. It does not result in additional productive resources nor does it directly result in enhancing shareholder value. The management argument is that since the shares are depressed announcing a share buyback is a tangible signal to the markets that management disagrees with the market assessment, and the hope is that the shares will rise in value. All of this smacks of financial engineering rather than management of the business. TTFN, CTC

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