Point 2, DELL has started issuing debt so they can continue their share buy back program with out interuption while they try to expand their business.
Jim,
If you have been reading this thread, then you know that the longs are in fairly strong consensus that the debt issue is specifically for worldwide facility expansion. Further, that it makes good economic sense for a company do use debt for this purpose, as the debt service costs can be written off directly for tax purposes.
wsrn.com
Examine the data on the link above, and you will find that DELL's ROE and ROA are such that low cost capital infusions make a lot of sense.
If you can borrow money @ x%, and get a return which is a multiple thereof, it makes good sense to borrow the money.
Some time ago, I asked if you carried a mortgage, or whether you had paid it off. You never answered. My guess is that you carry the mortgage because you can more effectively use the capital required to pay it off in other ways: the market, for instance.
Regards, 3. |
