IBM Message Board - Msg: 4404911

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Technology Stocks : IBM

IBM 310.51

-0.7%

9:38 AM EST

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To: Hsien W. Chang who wrote (3068)	5/11/1998 1:59:00 AM
From: Raj	Read Replies (2) of 8218

Hsien, <How is it that the stockholders' equity keeps on decreasing while the stocks IBM has bought back over the years are appreciating in value!! I don't quite understand!! > If I may , I will try and answer your question. When IBM buys back shares they are accounted for as treasury stock on the company balance sheet. This line item is seperate from stockholder's equity and as a result of the buyback it goes up. By buying back stock, IBM in effect reduces the total amount of shares outstanding to it's shareholders, hence reducing stockholder's equity. Keep in mind that we are talking about what is reported on IBM's books and not individual stockholder's price appreciation.

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