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To: Jacob Snyder who wrote (27825)	9/29/1999 8:46:00 AM
From: Benkea	Respond to of 99985

Interesting article on page 2 of the WSJ today regarding banks, credit quality, corporate buybacks financed by debt, compensation and street expectations for double digit EPS growth/ROE based buyback decisions.

To: Jacob Snyder who wrote (27825)	9/29/1999 8:56:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Jacob, good point, and i will come back to it later...not enough time now. let me just say that my own view of the stock buyback craze is a lot less sanguine as most people's. the reason: U.S. listed companies have incurred massive debts in recent years to finance these buybacks. in fact, corporate debt stands now at a post-depression record that towers mightily over any other previously recorded peak (details to follow later - in the meantime take my word for it that this is NOT good). obviously it is nonsensical to incur debt for buybacks when interest rates are on the rise and stocks are at nosebleed valuations. it all looks great as long as the bull market continues, but i doubt very much if shareholders' long term interests are really well served by this practice. all it takes for the stock buyback geniuses to look like they have squandered capital is for the economy to slow down sharply and the stock market to enter a bear phase. of course that'll never happen in the new era...<GGG> regards, hb

To: Jacob Snyder who wrote (27825)	9/29/1999 8:57:00 AM
From: Terry Whitman	Read Replies (1) \| Respond to of 99985

>If a company buys back 1% of its stock every year, isn't it returning the same amount of money to stockholders as if it has a 1% dividend?< JS- That is what Warren Buffet says. In fact, he says it is better, because you don't have to pay taxes on it. I am not so certain. Cash paid is cash paid. Investment back into the company can magically disappear in a falling market. But Warren sure has a lot more experience (and wealth) than I do- so you can make up your own mind on it. <g> In summary- You have to agree that the buybacks are better for the LT investor in a rising market. However, that may not be the case in a falling one.

To: Jacob Snyder who wrote (27825)	9/29/1999 9:18:00 AM
From: Matthew L. Jones	Respond to of 99985

Jacob, No (in a word) it is not. You are right in that the principle is returning to shareholders through "negative dilution" or shrinking equity pie, value before taxes. As for your percentages, 1% dividend is 1% of earnings (which are taxed) as opposed to stock repurchase of 1% of outstanding shares which would tied to float and not earnings. Assuming the company uses excess cash on hand to make stock repurchases it is essentially a tax free dividend. If the shares are repurchased through increasing debt, it is a balance sheet gimmick. Matt