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To: S. maltophilia who wrote (14279)2/18/1998 12:03:00 PM
From: Tommaso  Respond to of 18056
 
Yes, it's just a disposal of working capital to buy back one's own stock at a high multiple of book value.

It's quite different when a company judges that its assets are being priced at less than liquidation value and buys back stock.



To: S. maltophilia who wrote (14279)2/18/1998 12:31:00 PM
From: Zeev Hed  Read Replies (2) | Respond to of 18056
 
Khalil, but if they paid that same money out as dividends (on which you would pay taxes) the book value would decrease by the same amount. When they use the same money to buy shares, the total stock holders equity decreases by that same amount, but there are that fewer share out, thus the impact on the book value per share of buy backs is absolutely nil.

Zeev


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