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Technology Stocks : Cymer (CYMI)
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To: ForYourEyesOnly who wrote (9295)11/12/1997 6:39:00 PM
From: mauser96  Read Replies (1) of 25960
 
A share buyback might be good psychology, but it isn't good business for a company like Cymer, in the midst of a cash consuming expansion. It makes better sense for a company like Intel with billions of cash that they have no immediate need for. A company should buy back stock only if they have a big cash flow, the stock is underpriced, and the return on the stock purchases is greater than the internal return on putting the money to work in the business itself. Even then many announced stock buybacks are never completed, and those that take place often are just enough to avoid the stock dilution that occurs with exercise of employee stock options.
Management wants the stock price up. They are big holders, and also will find it hard to attract engineers using stock options as bait until the price moves up.
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