Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : IBM -- Ignore unavailable to you. Want to Upgrade?

To: Hsien W. Chang who wrote (3068)	5/11/1998 1:59:00 AM
From: Raj	Read Replies (2) \| Respond to of 8218

Hsien, <How is it that the stockholders' equity keeps on decreasing while the stocks IBM has bought back over the years are appreciating in value!! I don't quite understand!! > If I may , I will try and answer your question. When IBM buys back shares they are accounted for as treasury stock on the company balance sheet. This line item is seperate from stockholder's equity and as a result of the buyback it goes up. By buying back stock, IBM in effect reduces the total amount of shares outstanding to it's shareholders, hence reducing stockholder's equity. Keep in mind that we are talking about what is reported on IBM's books and not individual stockholder's price appreciation.

To: Hsien W. Chang who wrote (3068)	5/12/1998 8:59:00 AM
From: Bill Martin	Read Replies (3) \| Respond to of 8218

Well, I've never done the calculus on the effect of dividends on shareholder equity since I don't personally much like dividends or follow stocks which pay much out. I'm at a loss why people want the governments to get twice as much in taxes on each dollar of pre-tax earnings as the stockholder pockets (after the company and the individual both successively pay marginal income tax rates on the earnings.) I have done the calculus on share buy backs though and only purport to have done the math on those enough to personally favor them. Bill