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Technology Stocks : Dell Technologies Inc.

DELL 120.60

+1.8%

Jan 9 9:30 AM EST

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To: Chuzzlewit who wrote (80432)	11/15/1998 12:18:00 PM
From: BGR	Read Replies (1) of 176387

CTC, OK, understood! Modelling share buybacks as DRIPs helped a lot. Actually, I was just going to followup to my previous post as I understood my logical falacy by approaching from another angle. In the previous example, if we assume that the company had 9000 other assets and 1000 cash (total assets of 10000 resulting in 100/share value), in the dividend distribution case, 100 shareholders now own assets worth 9000, so the share price falls to 90 (plus each shareholder has 10 dollars of cash in hand). In the share buyback case, 90 shareholders now own assets worth 9000, so the share price should remain steady at 100. In other words, share buybacks do not add to shareholder value. I ignore short term effects as a rule. So DELL's earnings growth was 55% and not 65%. I now have to go back and check the historical rate of undiluted EPS growth. Thanks very much for taking the time to explain these concepts! -Apratim.

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