Brace! yourselves! startups! Yahoo! can't! wait! to! blow! $1bn! on! shiny! new! things! Yahoo! has upped its share repurchase program by $5bn as part of its aggressive buyback of stock following the sale of some of its stake in Alibaba Group. The Purple Palace has already spent $3.1bn buying back common stock so far this year, boosting its share price by around 74 per cent, using the proceeds from selling half of …
Would anyone mind explaining why buying back shares makes the share price increase? I understand that future EPS will be higher, but surely the value of the company has gone down by the value of the shares that are purchased (i.e. the cash the company no longer has) and therefore don't you get to a 'no change' answer?
Cash may be king but companies are expected to use it wisely. Giving surplus cash - dividends - to shareholders is one option - but that gives them a tax bill.
For this reason buying back shares is popular, especially in the US (for those tax reasons).
The simple act of buying props up the share price in the immediate term - and it gives signal that company thinks it is undervalued.
Furthermore, companies retire the shares they buy (or use some to meet share option obligations). That means the value of the company is divvied into fewer shares - hence higher price.
As for cash spent in buying ... some of the share price will reflect the liquid assets that the company holds, but fundamentals are assessed on things like price-earnings ratios and discounted cashflows.
"Can we lose the exclamation marks now pleeease?"
Have 27 upvotes just as soon as I can register another 26 accounts,.
But how about we lose them starting five years ago? It wasn't funny then and it gets less funny with every passing issue.
While we are at it, let's start paying proper respect to company and product names that degrade the language by, for example, adding spurious punctuation. And when I say "proper respect", I mean just that: - i.e., no damn respect at all. Yahoo is written just as you see it - Yahoo.
(One step at a time here. We will leave the iSilly and eDumb product names for another day.)
No! Keep the exclaimation marks! It's! Still! Funny!
But seriously. Realize that these headlines are the only means that some of us have to sense any kind of victory over the forces of silliness and immaturity, led by Yahoo!, that gripped the Internet so long ago. Bad enough that we have to endure Twitter and Facebook icons on every page we go to. These exclaimation-marked headlines are our own very small Howard Beale moment. Please, don't deny them to us!
For example, Yahoo could stop being the spammer's BFF. Yahoo could create anti-spammer tools that would disrupt or even destroy many of the spammers' business models. I know Yahoo doesn't have the resources anymore, but they could ask us for help, and leverage some of our spammer dislike (and hatred) into an actual fondness for Yahoo. Silly idea, eh what?
The amusing part is that by reducing the spam, Yahoo could actually increase the value of the entire Internet along with their own value. ROFLMAO. Yahoo? Do something to make the world better?
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
