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Technology Stocks : Amkor Technology Inc (AMKR)
AMKR 31.54+2.8%11:39 AM EST
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To: tech101 who wrote (524)1/28/2000 10:16:00 PM
From: Nelson Chang  Read Replies (1) of 1056
 
>>>I wonder what prevents other companies from doing the same without hurting its share price.<<<

In the US, companies use stock splits which does not dilute the earnings. Although the amount invested doesn't change you have 2x the shares, the company has not diluted its earnings so the stock price will appreciate accordingly.

However, for TSM, the company issues stock, which makes investors more wealthy but dilutes the earnings. So theoretically, the stock price would take a hit and the stock price would not appreciate as much in order to factor in the earnings.

If you think about it long enough, they are basically the same. But the long term and short term affects are considerably different.

In the US, they let the stock price appreciate. Then you get rich. For TSM, they just print you stock and make you rich instantaneously.

Just thought this was interesting...
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