Creative Labs (CREAF) Message Board

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Technology Stocks : Creative Labs (CREAF)

CREAF 0.370

-21.3%

Oct 31 1:10 PM EST

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To: Nazbuster who wrote (9727)	2/13/1998 9:20:00 PM
From: Flint	Read Replies (1) of 13925

Share buyback impact on share price will be complex but largely positive for Creative. Here's my 2 cts worth. Why is it complex ? 1. Fundamentally, even if you don't think much of the use of the cash in the company when it is in the company, the market still pays something for it. Hence when this cash is used to retire shares, the total value of the company falls compensated by the reduction of the number of shares outstanding. 2. Fundamentally, a sharebuyback also signals confidence from management. That it thinks the shares are cheap. That it doesn't need the cash hoard i.e. financially strong. 3. Technically, the freefloat counts. Any strong buying of a share that is not all that liquid creates upward pressure. In addition, with all the technical traders around, the thought that this could happen will already spur net buying from a powerful pool of liquidity. Ultimately, the impact is positive, but the extent is anyone's guess.. really.

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