Just one question, are companies buying back their own stock?

[HereSince1628]

or are they watching for things to go lower?

From where I sit, I don't see a trend in companies grabbing back undervalued stock. To me that says the companies themselves don't trust their p/e rations or their future earnings.

[liberalmuse]

1. I don't think so.

Let's just say Asia and Saudia Arabia now completely own our asses.

[HereSince1628]

2. At 52 week lows, and even lows over longer periods, buying by folks who know

the most about their companies might be expected if the companies had good looking futures.

It really has nothing to do with Asia or the Saudis. If the stock prices are good, companies would buy their own stock to reap the benefits in dividends etc.

[Fresh_Start]

3. I don't think the banks can afford

to buy back their own stocks right now

[HereSince1628]

4. I'm talking about Materials companies, tech companies, consumer goods producers...

everyone is down about 7% and NO one seems to be responding to this as an opportunity to buy back their shares at low prices.

I read that as these companies don't think this is anywhere near the bottom.

[Fresh_Start]

5. could be

or else they are preserving liquidity because they expect a long recession

[Best_man23]

6. There may be a few companies

But they are probably large cap companies with a hell of a lot of cash on-hand. Only one I know of for sure off the top of my head is Microsoft.

Most small- and mid-cap companies are probably holding onto their liquid cash because of the credit markets.

[Speck Tater]

7. I read they were SELLING stock to raise cash they can't borrow right now. NT

[HereSince1628]

8. I hadn;t heard that. That ain't good for stock values n/t

[gristy]

9. Two weeks ago Microsoft announced it would buy back $40B of their stock

http://blogs.wsj.com/deals/2008/09/22/microsoft-to-buy-back-40-billion-of-stock-it-didnt-spend-on-yahoo/

September 22, 2008, 4:02 pm
Microsoft to Buy Back $40 Billion of Stock It Didn’t Spend on Yahoo
Posted by Heidi N. Moore

Microsoft today said it would spend $40 billion on a larger-than-expected stock buyback program–one of the largest such efforts in history and more than double what one analyst predicted several months ago.

It doesn’t escape us here at Deal Journal that buyback is nearly as much as the software giant proposed to spend this year in acquiring Web advertising and search company Yahoo. It also is roughly the same amount in market capitalization that Microsoft saw wiped away in the first eight trading days after announcing its initial bid for Yahoo in late January.

Just after Labor Day, Chris Liddell, Microsoft’s finance chief, didn’t say a big buyback would put an end to the possibility of a Yahoo deal, but he did say the chance of a resurrected Yahoo bid is “so close to negligible that it’s not a constraint to my buyback activities.” Thus is this all the final coda to a failed M&A dance that highlighted the problems with Microsoft’s online strategy and its competitive plan in the face of challenges from Google. Microsoft stock traded at $32.20 on Jan. 30, the day before the bid. It hasn’t recovered that ground, closing Friday at $25.26.

As notable in the announcement was Microsoft’s plan to tap the debt markets for the first time. The honor of first tapping the debt markets originally was planned to help pay for Yahoo. But having access to the debt markets will also make other acquisitions easier, so the software giant once again is broadcasting that it doesn’t need Yahoo to move ahead. The $6 billion to be raised from the sale of debt could be used to help complete the buyback or for “general corporate purposes,” as the phrase goes, perhaps for other acquisitions.

[Hannah Bell]

10. what is the significance, strategy-wise, of buying back corp. stock?

i have some questions about microsoft & am trying to see the big picture.

thanks.

[HereSince1628]

11. Companies can make themselves look stronger if they buy back

There are many reasons, I'm not a professional trader or business person so I probably won't hit them all, or even the most important ones.

It shows confidence in themselves.
It can save their share values, as the company usually owns some of its own shares,
It can save large amounts of money by not having to pay dividends to other stockholders

Finally, and what seems important to me is that it generally makes it easier to raise new capital with new stock releases. With banks not wanting to loan, raising capital by releasing new stocks seems like a strategy.


When stocks are cheap it's a great time to buy them, even if they are for your own company.

[Hannah Bell]

12. thanks for answering.