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

To: Paul M. Rengier who wrote (633)	3/8/1999 2:56:00 PM
From: Chuzzlewit	Respond to of 1492

Paul, you asked Why don't they buy back their shares then? in response to the comment by the BMC CFO that the purchase would be made using cash because the stock was so undervalued. That's a good question, and I think the answer has more to do with philosophy than anything else. The way I view it, the purpose of the sale of capital stock is to provide the company with sufficient funds for capital requirements. And conversely, the purpose of repurchasing capital stock ought to be to return unneeded capital to investors. But the idea of repurchasing stock to simply prop up the price of the stock bothers me because it allows the company (with all of its inside information) to trade in competition with its shareholders. It could, for example, withhold some excellent news and buy up stock on the cheap. Dell does something a little different. Dell uses an ongoing stock purchase program as a tax advantaged surrogate for dividends. But this is entirely consistent with a "residual dividend" policy. Bottom line: I think Austin is doing the right thing. And the market has taken his action (a cash purchase) the right way. The price of the stock is up sharply. TTFN, CTC