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Strategies & Market Trends : Free Cash Flow as Value Criterion

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To: Reginald Middleton who wrote (61)10/30/1997 8:53:00 PM
From: Bill Morel  Read Replies (1) of 253
 
<Unless a stock buy back action is aimed at fuding a compensation plan, it should be considered a stern warning about MGMT's outlook for future growth. The stock buy back tells the astute investor that mgmt. cannot find an internal/external investment that is forecasted to yield anything higher than its own cost of capital. This is a BIG negative.>

So would you say that MSFT's use of $3B to buy back stock as part of its compensation plan (counteracting options) is a good use ? It seems that virtually all MSFT net income ($3.5B) was used to buy back options.
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