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Non-Tech : Tyco International Limited (TYC) -- Ignore unavailable to you. Want to Upgrade?

To: Bosco who wrote (618)	11/11/1999 12:45:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 3770

Bosco, maybe some elementary financial theory is in order here. First, theory teaches that borrowing money and repurchasing stock does not add value to the company. The reason is simply that the cost of capital is relatively constant within a broad range of leverage values. Second, a share repurchase is mathematically indistinguishable from a DRIP. In essence, the company is engaged in a return of capital that has no affect on the value of the company as a whole, but increases the value of the shares that remain outstanding. The advantage to shareholders of a share buyback is that it is essentially a dividend, but the "dividend" is not taxed as ordinary income. Instead, it is treated as a capital gain for tax purposes (on sale of the stock). I continue to believe (as I have for well over a decade when I first bought TYC shares) that this a superior company. I took advantage of the dip to the 30s by selling Jan 47 1/2 puts. TTFN, CTC