Dell Technologies Inc. Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc.

DELL 120.60

+1.8%

Jan 9 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Chuzzlewit who wrote (61441)	8/27/1998 12:24:00 PM
From: JRI	Read Replies (2) of 176387

OT Share buybacks... (A friend of mine had a question, and I thought I'd ask you)... He is doing some market research on a company in the utility industry, and that company has initiated a share buyback...He noted that the industry is undergoing massive consolidation (lots of firms buying each other)...His question to me was: "Why would a company buy back its own stock and could this be a reaction to (the consolidation going on in the industry). Would this/Could this mean that the firm is likely to buy another (utility) firm or that they might get bought out? My answer: Companies look at different ways to use cash on hand...Sometimes, companies (who (should) place increasing shareholder value at the top of the list) look at stock buybacks as a way to best increase shareholder value (and/orinvest the cash) vs. all other alternatives....Another possibility, although not necessarily the case, is that companies will buyback stock to defend themselves from possible takeover....that stock buybacks reduce the number of shares out on the open market and that with fewer shares out on the open market- the % of shares held by management increases, all things being equal. The higher % of shares held by management, the greater the possibility for management to fight an (unwanted) takeover. However, just because management has initiated a stock buyback, it does not (necessarily) mean that they are worried about an (unwanted) takeover possiblity... I told my friend that I couldn't think of a reason why a company would do a stock buyback if they were looking to buy other firms (in the industry)...that it would make more sense to "hoard cash" (and not buyback stock), so they wouldn't have to borrow to fund the takeover....even with today's low interest rates.. I guess these are the significant points. Anything you'd like to add/correct? Thanks in advance..

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next