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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: mepci who wrote (160550)	9/9/2000 10:41:48 AM
From: Meathead	Read Replies (2) \| Respond to of 176388

Let's give ourselves a pay raise.... Good morning mepci. RE: Do you have any idea how much Dell paid from current earnings for the 835m or so shares they bought? Yes I do actually. The 1B share buyback program was instituted back in the early 90's. Most of those shares were bought back before 1997 at well under $5/shr... many were bought in the $1 to $2 range. Dell's average cost basis for those 835M shares to date is about $3.50/share. Thus, they have spent approx $3B total in earnings over a decade. From that $3B this is what they have achieved: 1. There are 400M fewer shares outstanding than would have been... 2.72B vs. 3.12B. This translates to increased shareholder value. If they had to repurchase those 835M shrs today, it would cost $33B... clearly not possible. 2. Out of the 835M shares, approx half have been granted in the form of stock options, the other half retired. 3. That $3B investment has translated into $15B worth of wealth for Dell employees from the CEO on down to the janitors. Half of that, ~7.5B has gone to MD and the top brass. 4. The other 7.5B of wealth that was created in the marketplace went to all employees who have gotten stock options over the years, participated ESOP and 401k. 5. The other half of that 30B buyback value has gone directly to the shareholders in the form of increased market cap i.e. stock price. Re: Don't you think a SEf $18B will fetch a better price and p/e and peg. Not really cause stock valuation is not tied to cash on the balance sheet. Had Dell not instituted the share buyback program, they would only have 12B in cash instead of 9B. But this would be diluted by the fact that 400M more shares would be outstanding. The stock price would be the same as it is today and Dell would have missed the opportunity to distribute billions worth of wealth internally to the folks who made the company what it is today. IMO, Dell is hiding nothing... they can't. The info is all there and it's easy to see where the money goes. The research shows that Dell's buyback program to date has been hugely successful. Half of the benefit has been distributed to employees and the other half to shareholders. The unquantifiable question is: Where would Dell be today if they did not use this as a tool to attract and retain top talent in an industry where good people are a finite resource? I think the real beef many have with this is that of the 15B that has gone to the company employees in terms of wealth generation, half of that has gone directly to Michael Dell. I don't have a problem with this. The share buyback program and re-distribution of half in the form of stock options has nothing to do whatsoever with why the stock has been flat for the past 2 years. If anything, this program helped the stock price achieve what it did in the 90's through reduction of shares, employee acquisition, motivation and retention. Going forward however, this tactic wont work and could backfire financially. And, I dont see those remaining 165M shares snatched up by the company anytime soon as it would cost 6-10 Billion to do so. MEATHEAD