Corporations Using Record Piles Of $$$CASH To Buy Back Stock, Not Generate Jobs

[Panaconda]

U.S. companies buy back stock in droves as they hold record levels of cash

By Jia Lynn Yang
Washington Post Staff Writer
Thursday, October 7, 2010; 12:04 AM

For months, companies have been sitting on the sidelines with record piles of cash, too nervous to spend. Now they're starting to deploy some of that money - not to hire workers or build factories, but to prop up their share prices.



Sitting on these unprecedented levels of cash, U.S. companies are buying back their own stock in droves. So far this year, firms have announced they will purchase $273 billion of their own shares, more than five times as much compared with this time last year, according to Birinyi Associates, a stock market research firm. But the rise in buybacks signals that many companies are still hesitant to spend their cash on the job-generating activities that could produce economic growth.

Some companies are buying back shares partly because they don't want to invest in developing new products or services while consumer demand remains weak, analysts said.

"They don't know what they want to do with all the cash they're sitting on," said Zachary Karabell, president of RiverTwice Research.

...

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/06/AR2010100606772_pf.html

[dkf]

1. This is such a stupid argument.

Companies don't hire people for the hell of it, especially when so much legislation is in limbo, like implementation of health care reform, financial reform and the tax situation.

With so many unknowns no company is going out on a limb to hire willy nilly.

[cbdo2007]

2. Right, this is called the "back up plan"

Hiring is still the last thing on their list after covering their asses so they'll lose less if this happens again.

With stock prices still at relatively low levels for many companys, they are making an investment in themselves, which is a good sign to point to their future growth.

[maryf]

3. "They don't know what they want to do with all the cash,,,

They could share the wealth, take care of the needs of many...they could, but as we know it won't even occur to them...

oooh maybe they'll need a write off and give to the Gates foundation!!! :sarcasm:


K&R

[Starry Messenger]

4. Well, I guess they can wave at us all from the larger yachts offshore.

Isn't this simple? Jobs=consumers. Who is buying their crap?