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Non-Tech : FedEx (FDX)
FDX 259.95+0.4%9:36 AM EST
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To: skinydipper who wrote (430)9/28/1999 10:31:00 PM
From: dogfish  Read Replies (2) of 524
 
this is not a logical way of interpreting the repurchase. if FDX is currently worth " X " on the open market, and the company is going to repurchase .5X the remaining shares in public hands are .95X of the company as constituted before the repurchase. the company is going to use funds to repurchase that stock, funds that would otherwise be deployed in some other fashion so the net result as a whole is really a wash. shareholders will be left holding shares of a company whose balance sheet has been reduced by the amount needed to repurchase the stock. this is not to say that the repurchase will not support the stock price, it may indeed have that effect, but keep in mind that repurchases are often made on weakness. companies do not usually chase the price of the stock. one more point, refer to Cendant share price recent history. that company has bought back large amounts of its own stock in the past year including a dutch auction from $5 higher.
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