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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: gerard mangiardi who wrote (46933)	5/14/1998 2:52:00 PM
From: gbh	Respond to of 61433

Buybacks aren't smoke and mirrors. Hell with IBM its like getting a 4% stock dividend each year. Agreed. I love buybacks for companies that generate gobs of cash, and have relatively low R&D expenditures, ala DELL. But IBM, has had little top line growth the last few years. So how have they grown bottom line? Expense cutting was first. But that was largely done 18-24 months ago. In fact, they are now growing employment numbers pretty steadily. Next was share buyback. This is good on the surface, but if the quarter looks a little weak, they need to buy extra shares. So they have been borrowing money, adding to what they refer to as "core" debt. Buying from $200M to sometimes as much as $800M in a given quarter. If the next quarter, is better, they pay the debt down a little with earnings from operations. This works quite well in a low interest environment, when that borrowed money is cheap. But if rates scoot up a bit it hurts a lot more than in might otherwise. This is what I call smoke and mirrors. But its just MHO. Gary