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

To: BGR who wrote (80528)	11/15/1998 7:59:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 176387

Apratim, DELL buys back its shares at much lower cost than the current market price. The 10-q and 10 K SEC reports have the buyback prices in them. Thus it is value additive.

To: BGR who wrote (80528)	11/15/1998 8:45:00 PM
From: Richard Tsang	Read Replies (1) \| Respond to of 176387

Good question. My thinking is that whether the specific buy-back is value additive or not depends on how much the company actually paid for the purchase (less proceeds from the sales of puts, if any), compared to the price they received from issuance of the shares (the option strike price) being retired. This assumption applies to repurchases that are specifically geared to offset the stock options being exercised. RT

To: BGR who wrote (80528)	11/16/1998 1:03:00 AM
From: Moominoid	Read Replies (1) \| Respond to of 176387

Now whether or not that excess cash is used to repurchase shares or not, share price is unaffected. Share price is only affected by net income increase which is calculated based on net income of 10. My naive view was that the buyback raises share prices because future earnings are distributed over fewer shares and therefore eps will be higher. If they paid a dividend instead future earnings would be the same but spread over a larger number of shares. This is a tax effective method of distributing dividends for all but the lowest income categories of shareholders as the CGT rate is lower than the income tax rate. In Australia we don't usually see buybacks because tax rates on dividends are lower than on capital gains. David

To: BGR who wrote (80528)	11/16/1998 11:50:00 AM
From: Chuzzlewit	Read Replies (3) \| Respond to of 176387

Apratim, you said: Given that DELL's net income was less than 0.6 billion this quarter and they purchased 18 million shares back this quarter, the average purchasing price of shares must have been less than 28-29 and possibly as low as 20 (assuming some of the income was reinvested otherwise). This is way below market price for shares (which stayed in the range 40-69) and was probably made possible via use of derivatives as Jim had earlier pointed out. I apologize if this has been previously published by someone else, but I think your comments incorrect. There is no connection between reported earnings and the price paid for repurchasing shares, so you cannot infer anything about the prices paid for stock based on earnings. Similarly, "profits" derived from selling puts are not included in income statements. TTFN, CTC