Victor: To answer your question:
>Would shareholders prefer to spend reserve cash buying back shares (which will be
>bought by the market anyway in a matter of days/weeks) or use it to make a profit
>on the AV deal?
Definitely use the cash to make AV a block-buster IPO.
What I am wondering is if CPQ is buying back shares as a cheap means of providing shares to people who acquire stock via dividend reinvestment, employee stock purchase plans, and via exercising of stock options. CPQ must have a rough idea of how many shares they will distribute to people in the course of a year and must have some projections for a few years into the future. If this is publicly available information I do not know.
Without the necessary information at hand, I do not know how many authorized shares remain outstanding. The authorized number was increased, by shareholder vote, before the last stock split. Right off, I do not know the number of shares remaining.
What I am getting at is that CPQ, knowing it will be distributing a number of its shares to the aformentioned categories of people, might view buying back shares now, while shares are cheap, as a good way to make some money. Here the idea is that say, an employee who buys shares through the shareholder purchase plan might be getting shares at 35 [taking the 85% of CPQ's price into account]. If CPQ is distributing shares that only cost them 30, they are ahead of the game. If CPQ is going on the open market at 60 or more come AV IPO time, CPQ is saving/making a bundle.
Maybe Rudedog, who knows some of these people, will have insight into the logic of CPQs stock buy-back decision.
Lynn |
