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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: saukriver who wrote (24146)	5/3/2000 11:07:00 PM
From: StockHawk	Read Replies (1) of 54805

>>does MSFT then need to pre-announced diminished revenue expectations because of the expected losses on the put warrants? << Lets not get mixed up here. MSFT will use cash to buy stock. That has no effect on revenues. Cash, which is an asset, will be used to buy the stock. After the transaction there will be less stock outstanding. Since Earnings Per Share is calculated based on the number of shares, and since there will be fewer shares - the transaction will have a positive effect on EPS. As as a shareholder, your portion of ownership in the company will increase. That is why companies today often buy back shares instead of using the cash to pay dividends. (dividends are taxible to shareholders at ordinary rates, but if fewer shares outstanding lead to an increase in share price, then taxes are postponed until the shareholder sells and are then taxed at capital gain rates). StockHawk

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