Wayne -
(...Agreed. Companies need never repurchase the exercised options. But the dilutive effect costs me just as much in terms of EPS progress, percentage ownership, and ultimate investment value...)
From a very limited sample, I don't think this is true. As a test, investigate what the dilution would actually be if no shares were re-purchased. I suspect that you would find that a typical company that you might want to invest in, at a reasonable price, might have 25% sales growth, less than 5% dilution per year without buybacks, and between 25% and 100% of earnings used to buyback back stock just to maintain share count at neutral. If I am buying because I want a claim on earnings, then I believe the numbers will show that the dilution will be preferable. I suspect that Wall Street tends to place far too much value on buyback announcements, even if share count is not reduced.
Regards, Don |
