Tyco International Limited (TYC) Message Board

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Non-Tech : Tyco International Limited (TYC)

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To: Bosco who wrote (630)	11/11/1999 1:29:00 PM
From: Chuzzlewit	Read Replies (3) of 3770

Bosco, Sorry if my post came across as critical of you -- it wasn't meant to be. It was prompted by a lot of nonsense posted on this thread about the implications of share repurchase programs. There are essentially three theoretical reasons for share repurchases. 1. Avoidance of taxes on dividends; 2. Fear of decreasing earnings per share. By reducing the number of shares o/s eps will increase; 3. A belief by management that the current shares price underestimates the true value of the company. My firm belief is that the third reason is the one that has prompted Tyco to initiate a share repurchase program. In view of Tyco's huge cash flow, there is little added risk owing to increased leverage ratios. Since a share repurchase program has no mathematical affect on the price per share (save a very small tax result), only time will tell whether management's valuation assessment is correct. In the worst case it is simply a public relations gimmick.In the best case management's assessment will be borne out and those of us who are long will realize a nice profit. TTFN, CTC

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