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Technology Stocks : 3DFX -- Ignore unavailable to you. Want to Upgrade?

To: Michael Linov who wrote (7390)	9/18/1998 10:43:00 AM
From: RDH	Read Replies (1) \| Respond to of 16960

Michael states: "Buying back stocks when your company is above book value is pointless." Well, most of the buybacks (in terms of market cap) in the nineties by companies in the S & P 500 have been above book value. Buying back shares make sense if it is the best use of cash on hand. It can reward shareholders in two ways: it decreases the number on the market and can provide a nice Return on Equity if the stock was truly undervalued (and if it is a better investment than anything else the company could do with the money). A company in trouble, often cannot afford to buy back shares -- too risky. Companies doing well and growing (and are above book) often are best positioned to buy shares to take advantage of "low" stock prices and to provide a nice gift to their shareholders. Certainly a better use of the money than paying dividends or acquiring companies that are not related to the main business (deworsification as Mr. Lynch calls it). - RDH.