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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (49502)	5/5/2000 9:33:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 99985

Haim, that is exactly what I was thinking of, stock buy backs. IBM has gone from a debt free company to carry a debt of $28 Billion, a bunch of which (I would guess at least $10 Billions) has gone to buy their own shares. But I view this in a another light, with its debt burden IBM now has a return on equity of between 25% to 40% (last quarter was high, more debt?), their return on assets is only 9%, so debt, when well managed does increase ROE. Furthermore, buy back of shares (to the extent these shares are not simply given to management, but used to reduce share count) is actually a tax free dividend to the holders, raising the dividend payout in stealth. Just don't tell Congress about it, they'll find a way to tax those tax free dividends (G). Zeev