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Politics : Ask Michael Burke
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To: Freedom Fighter who wrote (72144)12/21/1999 1:01:00 AM
From: Simba  Read Replies (2) of 132070
 
Can someone tell me if a share buyback is exactly equivalent to the issue of dividends ? I am not a business major, so please bear with me.

My thinking is that it is not exactly the same from an investor standpoint. I would prefer a dividend (hard money) than the hope of a capital gain induced by an artificial boost to EPS based on a shrinking share base. In some cases the buyback does not seem to have the intended effect. For example, for all of 99 Boeing spent 1.6 Billion on buying it shares back but it has not had the magic effect on its share price that the CFO intended. In fact they bought it at higher prices than the current one. I think a share holder would have done better with a direct dividend in this case atleast for the short term.

Any opinions ?

Simba
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