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

To: Jim Patterson who wrote (38240)	4/17/1998 3:23:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Jim, you still don't understand leverage. The reason that stock buybacks enhance shareholder value is that you have substantially the same profits, but less shares of stock, so eps goes up. This is not just a short-term benefit -- the effect persists. The converse of this is when a company has a secondary equity offering, and the price of the stock drops. That's because the additional equity creates dilution of earnings. There are two dangers in borrowing money. The first is that the company will earn less on the borrowed debt than the interest it pays. The second is that cash flows will be insufficient to cover the total debt burden. The best way to see how much cash a company is generating is to look at its cash flow statement (required by the SEC). I think if you look at it you will find that Dell is a phenom amongst growth companies. Someone posted a link a few days ago concerning Dell's use of a metric they call the cash conversion cycle. If you haven't read that, by all means do so. It is an eye popper. I have never seen a company with a cash generating engine like Dell's. TTFN, CTC

To: Jim Patterson who wrote (38240)	4/17/1998 6:24:00 PM
From: Robert Scott Diver	Read Replies (1) \| Respond to of 176387

Jim, IBM is growing, though not as fast as I would like. IBM's stock has been going up. Part of the reason is IBM's buybacks increasing EPS. Buying rising stock is hard to fault. Stock buybacks do have a continuing positive influence on stock price even after they end, unless the law of supply and demand gets repealed. BTW the bears on the IBM thread made the many of your arguments. IBM longs have made far more money. Scott