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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: James C. Mc Gowan who wrote (181100)7/18/2002 2:06:43 PM
From: Earlie  Read Replies (1) of 436258
 
James:

Thanks for the comments. Much appreciated.

A related idea struck me last night while working away at the IBM numbers. Question: How can a company that is barely breaking even (if that), justify spending ANOTHER $1.8 billion buying back its own stock (it's been buying back its stock at this rate more or less ever since Gerstner arrived), particularly when its shareholder equity is evaporating and its debt load is immense? Add in the fact that in both its quarterly report and in its guidance, the company bluntly stated that it expects a very difficult business environment ahead. Does this make sense? The only answers that I could conjure up is that it makes sense if certain execs still have plenty of options to exercise and sell, or if the company was still somehow involved with selling put options against its own stock. The former item is more likely as the SEC really cracked down on that sick latter practice a year or two ago.

Best, Earlie
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