Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 155.15

+2.1%

3:59 PM EST

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To: Ira Player who wrote (9964)	6/11/2001 9:52:19 PM
From: Zeev Hed	Read Replies (1) of 10921

It is an excellent allocation of capital, since you are buying assets with returns of 80% (well gross returns) while paying only some 8% on the debt you put on the balance sheet. That is how companies with return on assets of 15% can generate returns on net equity of 35%. The point, however is, that a well managed corporation having return of 80% (please PM me if you know any), should, if well managed be able to expand its own business (which has the same returns) rather than use the funds to buy back shares. The only exception I would have, is if the shares are selling at discount to book value, then, it is definitely a good use of funds to buy your own shares under book. Buying above book value really dilute your own book value. Zeev

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