Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Burt Masnick who wrote (72867)	9/23/1999 6:31:00 PM
From: kash johal	Read Replies (2) of 1571379

Burt, Re:" If they bought 1.5 billion $ worth of stock and kept it (which is what I think really happens, by the way), they get back the 1.5 billion in cash. What's the point?" I am sorry but u are wrong. When a company buys back stock it becomes treasury stock and is effectively retired. The company can at some later date decide to issue stock to the market. But it is much more complicated than an individual trading. The buyback does reduce the total oustanding number of shares though. The 1.5bn goes into the pockets of the folks who sold the stock to Intel. In a perfect market a company buys back 10% of its stock, its stock price should increase by 10% as the companys overall value has not declined. So it is a net zero transaction except for the fact that $1.5bn has disappeared. regards, Kash

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