wbmw, "Stock buyback goes towards employee stock bonuses, a necessary compensation if you want continued positive results from your work force."
Here we are, back to the original thesis: stock buyback
is "a necessary compensation" for labor, as a part of
sustaining the business. Good.
(BTW, what the heck yours "buyback goes towards" mean?
You promise to an employee an option to buy your
company stock at $5/share, do you? The guy/gal worked
hard over the years, and elected to cash out the options
today, right? You issue few new certificates, and get
$5/share, and you recognize this as a revenue BTW.
However, it dilutes the stock, and at 3% per year of
option issuance rate stockholders are not happy with
this, so you decided to buy those shares back, at
market value of $30. You even can think that you bought
back exactly the same certificates, for simplicity.
So, $25 "goes towards" nowhere, into a labor expense
that is not recognized as such in GAAP earnings. Period.)
"However, their revenue minus yearly expenses is still a positive number"
Are you sure about that? Even if you subtract those $4B/y?
(and I am not nitpicking about "one-time" acquisition
charges). Maybe you need to look at, say 4Q01?
- Ali |
