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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (54531)	4/4/1999 3:47:00 PM
From: yard_man	Read Replies (1) \| Respond to of 132070

I understand, Zeev. Really I do. The holder of shares is foregoing an increase in the dividend for the increased appreciation brought about by the share buybacks -- simple. Tax treatment on the capital gains is better from a couple of standpoints -- one the gains are deferred until one actually takes the gains and they are taxed at a different rate. But suppose the stock takes a dive -- in that case it would have been better to have the dividends, unless of course one is a DRIP. The DRIP would be worse off perhaps. I think buybacks make sense when shares are precieved to be undervalued, but at present for IBM and some others which are trading at rich multiples (even given a different method of valuation which takes into account the sub of gains for dividends) buy backs are not a good use of the Company's funds, but rather something that happens because of management incentives.