IBM Message Board - Msg: 3255893

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Technology Stocks : IBM

IBM 304.07

-0.1%

12:04 PM EST

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To: Toby who wrote (2277)	1/25/1998 4:56:00 PM
From: Earlie	Read Replies (2) of 8219

Toby: As you suggest, share buyback programs are not, in and of themselves bad, so long as they are used intelligently. I also agree that a 30% share price appreciation is not something one would expect the current shareholders to criticize (g) There are some things that could be considered worrisome. - as pointed out on the thread, the percentage of daily volume that is attributable to the share buyback program is very high. What happens when the company is no longer able to do this? - Debt is rising. It's still not out of sight but it is getting to a level that is hard to ignore. - Cash as a percentage of debt is declining. - Shareholder equity falling significantly is usually a red flag. -Usuallly stock is repurchased when it is undervalued, not at the peak of the market. - The stock price appreciation is not a reflection of an improvement of the company's results or growth, but of the provision by the market of a larger multiple. Could this larger multiple not be as a result of the share buyback activity? Anyway, I personally worry more about the declining quality of the revenue stream than anything else. Best, Earlie

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