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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (58066)4/29/1999 4:07:00 PM
From: valueminded  Read Replies (3) of 132070
 
Mike:

Although, I understand the gist of your responce, the question still remains. If IBM "retires" 10mil shares, they need to use 2bill to do it. Whether they borrow, take from cash flow, borrow some, use some cash etc, it really doesnt matter. What has to happen for it to be accretive to earnings is that the opportunity cost of that 2bill (say at 6%) which equates to 12$/share has to be less than the earnings they expect to get. I see no other way around that (short of the proverbial borrowing) and taking the tax credits to augment the earnings sheet. Obviously, I am missing something but I sure as heck dont see it.

thanks
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