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

To: Sr K who wrote (42682)	5/17/1998 12:50:00 PM
From: Lucretius	Read Replies (3) \| Respond to of 176387

You HAVE seen the effect of the buybacks. the buybacks lower the number of shares outstanding. You have seen the effects of these buybacks. How do you think DELL can "grow" its earnings. DELL continues to borrow money to buy its stock. This will come back to haunt them. These buybacks allow DELL to actually not grow "true" earnings, and buy stock to make their performance look better. It essentially works like this: A co. can have flat earnings (DELL's have grown, but not to the extent that they have appeared to), use those earnings plus borrowings to buy back shares, thus making it appear that earnings are growing. Meanwhile, what is really going on is comparable to a co. having flat earnings and paying out dividends w/ borrowed money, would you pay 60x earnings for such a co? As DELL's mkt cap gets larger and larger, it will be increasigly harder for DELL to buy stock and "manipulate" their earnings higher in a meaningful way. -Lucretius