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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: BGR who wrote (80528)	11/16/1998 1:03:00 AM
From: Moominoid	Read Replies (1) of 176387

Now whether or not that excess cash is used to repurchase shares or not, share price is unaffected. Share price is only affected by net income increase which is calculated based on net income of 10. My naive view was that the buyback raises share prices because future earnings are distributed over fewer shares and therefore eps will be higher. If they paid a dividend instead future earnings would be the same but spread over a larger number of shares. This is a tax effective method of distributing dividends for all but the lowest income categories of shareholders as the CGT rate is lower than the income tax rate. In Australia we don't usually see buybacks because tax rates on dividends are lower than on capital gains. David

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