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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (34265)10/21/1998 5:52:00 AM
From: valueminded  Read Replies (1) of 132070
 
Mike

You must really help me out on this one (IBM) How can they show earnings and have stockholders equity take a hit. My accounting alert starts flashing whenever I see a company report earnings and show a hit to stockholders equity.

I see how it can be done by increasing debt to buy back shares thus trading expensive debt financing for cheap equity financing - but it would seem unwise to me to perform such an act unless you were convinced that you were buying back a dollars worth of assets for less than a dollar. What am I missing here ?

On another note, how can the tax rate be going down unless there is a future writeoff which would make all things balance - maybe something that hasnt been broached yet.

thanks
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