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Technology Stocks : Compaq
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To: QuentR who wrote (54373)3/22/1999 11:16:00 AM
From: rupert1  Read Replies (3) of 97611
 
QuentR: The major flaw in your analysis is that the executives of CPQ rely very much for their personal wealth on the stock being at a reasonable value - or above reasonable. Do you think they are altruistic enough to want their own personal wealth to suffer to help the company get a lower price for its own shares? And where would this decision be made - in the boardroom? Such a decision would open them to prosecution and imprisonment.

Most companies do not use up their quota of shares authorised in buyback programmes. They use enough of it to replace additional shares issued to supply option granting programmes. Some keep the authorisaton for a rainy day in case the company stock gets badly hit. But this is not to say they hope for a bad hit. They use the buyback program to express their confidence in the company, to encourasge other investors to buy and, in general, to restore the share price. I would think that if CPQ dropped to $25 it would start buying big.
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