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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Night Writer who wrote (78565)	2/20/2000 8:58:00 PM
From: rupert1	Read Replies (1) \| Respond to of 97611

NW: If that posting was in reference to the TYC share buy- back that I had mentioned, I would respond that its claim that share buybacks are often a sign of a share price in distress is sometimes true. It has to be examined on case by case basis. Many buyback programs are not executed. They are announced as sign of management's confidence in the company: sometimes, they are no more than a facility for management to buy back shares which can be for the exercise of employee options. In the big market corrections, leading companies announce buy backs to help restrain price falls, restore confidence and actually buy back their shares at a discount. Many buybacks are made by strong companies maximising shareholder value. COMPAQ has a buy back programme but we hear very little about its execution, and if executed it does not seem to have supported the share price. The TYCO buyback was part of a co-ordinated series of announcements beginning with the announcement of the IPO of TYCOM, its better than expected earnings, its guidance of more than 20% growth going forward and various acquisitions and dispositions. The only cloud on TYCO's horizon is the informal SEC enquiry and many major brokerages and accounting firms have stuck out their neck with an opinion that the SEC will clear completely or find some minor technical problems. So it is probably true that TYCO used the buy back announcement partly because its share price had been distressed - but if you look beyond that fairly obvious finding I think all the other factors are positive, including recent purchasers by insiders (and especially the CFO, who should know something about the books and the progress of the SEC enquiry, and the Chairman). This is not to say that TYCO is not vulnerable to a broad market correction or to misapprehension by WS. But in this case I do not think the buyback programme is a diversion from hidden problems as it may have been in the COMPAQ case.