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Biotech / Medical : WebMD Health Corp
WBMD 66.480.0%Sep 18 5:00 PM EST
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To: Keith Fauci who started this subject3/29/2001 9:11:34 PM
From: Michael Olds   of 326
 
This is how I read the share buyback:

A 50 million buyback at these prices neatly counter-balances any dump that Quintiles might make in April when one third of their 35 million locked up shares are unlocked.

Prudential had called for a share buyback of "in excess of 100 million dollars" and stated that no buyback would be a negative.

A 100 million buyback would balance off the possible April sales plus the second tranch of shares from Quintiles that are available in the final quarter; that is, it would have maintained the status quo at the $6 price that HLTH was at when Pru called for the buyback. (Pru's analysis indicated a cautious belief that that price could be maintained with such a buyback).

My take is that the 50 million move is a statement of confidence by management. They needed to soothe the nerves of the analysts, but also needed to make the statement that they believed that they were on the stated track to profitability by Q4...that is, that a share buyback as a finger in the dyke was not necessary out passed this quarter (where, at this time, the stock is vulnerable due to a lack of information).

Conclusion: at $5, given no further developments until next earnings announcements (not a given at all), the stock is under-priced by (at least) $1.

mo
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