El Dollar: I don't think that the buy-back info would be illegal, since an executive had already mentioned that earlier this month.
To give another rosy picture.... I don't favor a stock buyback at all. I'd rather see TLC hang onto the cash that they have. They could vote to buy back some shares, but, how much effect would that have? They've got $110 million in cash. If they buy back 10% of their stock, or 4.6 million shares, it would cost them $38 million. So, TLC's stock might go up by 10% or so, possibly for a short period of time. What would happen if they spent their cash on a buyback, a software slowdown hit, they needed cash, and the stock went down futher after the buyback?
That, to me, to a company with $480 million in convertible, at $53, debt might not be the best spending of money. I'd rather see them plow that into the business. With the stock price so low, TLC might have problems getting refinancing or additional financing, if they needed it. Let's say that there is a temporary slowdown in their business, until their new products get going. The important thing is that TLC can get thru some slow times. Cash might be very important. If they had to issue more stock, at $8 per share, the dilution would be awful.
So, TLC is in a tight spot. They want to do right for their stockholders and to the holders of the bonds. They also have a business to run.
Tomorrow's meeting is going to have a lot of head scratching. Hopefully, they will come out with some good news about their products. Even if it is a negative announcement about 1st quarter earnings, but a promising looking future? The bottom line: If TLC's share price ends the year at $20 per share, we can live with some bad times now. But, that is a big "if"?
TLC needs to tell us how big an "if" that is....
Regards, Bob |
