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Pastimes : The Big Picture - Economics and Investing

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To: Arik T.G. who wrote (644)11/2/2000 12:39:17 PM
From: Don Lloyd  Read Replies (1) of 686
 
ATG -

...When a company reports a $1B earnings, pays no dividend but buys back stocks with $1.5B (partly financed by loan), and the number of stocks remains the same because employees exercise their options, how do you measure the real earnings of that company, assuming there was no other creative accounting?
Does this company create value?...


Considering just the buyback of stocks, its justification depends on price paid and future value, just as with any other investment.

Regards, Don
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