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Politics : The Trump Presidency -- Ignore unavailable to you. Want to Upgrade?

To: zzpat who wrote (33495)	9/7/2017 1:19:30 PM
From: i-node	Read Replies (2) \| Respond to of 362552

>> I don't know if you knew the company Blockbuster, but it soared for many years and then collapsed. The collapse was extraordinarily fast. By the time they realized they had a problem there wasn't enough cash left to do anything about it (streaming etc.). Netflix took their market and Dish bought their assets. I knew Blockbuster extremely well since I knew some of the people who were there early. They were much like Penn Central and Kodak: They didn't understand what business they were in. It was mismanagement that killed them as much as anything, and this failure will make a first-rate business policy case in MBA school. Probably already has. Innovation today is a short-term affair. Success is not about the technology, it is about mind-share, and the mind-share is what is quickly scooped up by some other business, sadly.

To: zzpat who wrote (33495)	9/7/2017 6:38:23 PM
From: TimF	Read Replies (1) \| Respond to of 362552

Just because technology and business conditions can change rapidly, doesn't mean that heavy reinvestment in the company is always and everywhere necessary or even always a good thing. If a company has high profits and free cash flow (or maybe even more ordinary profits if their industry is not one where strong growth is likely) it may have more money than it has good internal investment opportunities. There are other things to do with that excess money than buy back stock, but if the stock is not overpriced in the opinion of management than stock buybacks aren't a bad way to use the money. They could just sit on a pile of near cash equivalents. But past a certain point (for future investment opportunities and as a buffer in bad times) that starts making less sense. They could buy out another company, but that isn't always a good idea either. They could invest in broad baskets of securities, but if their shareholders wanted their money to be used that way they could have done so themselves.