We can say they are fighting dilution, or we can say that the anticipated return from share purchase is greater than that of the alternatives, but when we reflect on how that higher anticipated return can be realized, we are in effect saying the same thing.
Not exactly. Management that has the resources and makes optimal investments by buying back stock is judged as excellent managers. Management that buys back stock to counter dilution, may appropriately be judged as trying to pump up EPS, a somewhat sneaky behavior.
OK, let's see if we can avoid getting mired down in semantics. I'm going to move this to the most basic level simply to make sure we are on the same page: How does a company realize a return by buying back stock?
Regarding sneaky behavior: I had assumed rational management, with adequate resources, using their best judgement (even though their judgement may turn out to be wrong). I had not considered other situations, but I can accept that if one did have such situations in mind, the "fighting dilution" could be seen to be a negative commentary.
True, but the $140 million is ours when that happens.
I think and hope that when the time comes, we would rather have the stock!
the merger no doubt invoked the pooling-of-interests method. Unless I'm mistaken, that presumes an exchange of stock occurs.
That is my understanding as well. But the reason I was even pondering this is the magnitude of the cash hoard. The equivalent of two years revenues (roughly, and looking forward) sitting in instruments on which we expect to earn a lower return than the business of selling RTOS software and service. That is enough to weather almost any tornado (pun intended) I can imagine.
Pirah
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