For example: Yahoo buying back $3billion worth.
2006-10-18 06:41:43 · 9 answers · asked by Rahman K 2 in Business & Finance ➔ Investing
This action takes some of the company debt out of play. It allows the company to basically pay off some of the loans. When a company issues stock, it is actually borrowing money from the stock buyer. When they buy back like this, they are taking some of the cash that's in the bank and paying down the loan. This also has the effect of causing the remaining stock still out there to increase in value. Why? There's a lot of technical reasons that I can't explain here. By paying down debt they don't have to pay income tax on the cash and they lower their debt. All are good things. With less debt the company and it's stock are more attractive to investors and this causes the price to increase.
2006-10-18 06:49:59 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Well, it normally means that the company is throwing the investors' money away.
When the price of the company stock is falling--Yahoo--they think that buying back the stock will support the price and maybe keep their stock options in the money. Tech stock companies are notorious for buing back stock. Some companies such as Cisco for example buy back their stock because they have granted so many stock options that the earnings per share would tank if they did not buy back the stock to reduce the number of shares. Dell is another. They have purchased millions of dollars worth of their stock at prices far hight than the current price of the stock. They litterly threw away billions of dollars in stock holders' assets.
Now it Yahoo's turn to throw away stock holders' assets.
2006-10-18 08:30:19 · answer #2 · answered by Anonymous · 1⤊ 0⤋
It ususally means they are trying to drive up the share price, bring more attention to their stock. When a company buys it's own stock it sends the message that 'hey shares are a bargain at this price'. It also shows confidence in their own company and that attracts share holders, which supply and demand tells you will drive up the price of each share which is what yahoo wants.
2006-10-18 06:48:35 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Well if one person or company owns all the stick then it isnt privately held who ever owns the most gets to run the company. and if yahoo buys back its own stock then it wont be considered a publicly held company it can be private again. Its a way of transferring power.
2006-10-18 06:44:18 · answer #4 · answered by donyafs 3 · 0⤊ 1⤋
I would assume it means just that, that they are buying back its stock which I would also assume would drive up the price of the common stock since there is less supply.
2006-10-18 06:45:21 · answer #5 · answered by cruz734 2 · 0⤊ 0⤋
it becomes treasury stock and have no dividends, no voting rights and not considered as outstanding shares. good for stockholders because it lowers the number of outstanding shares although some companies do it to increase their EPS
2006-10-18 06:55:19 · answer #6 · answered by weenafive 2 · 0⤊ 1⤋
They buy it back so they won't have to pay dividends on the stock
2006-10-18 06:43:51 · answer #7 · answered by dwh12345 5 · 0⤊ 1⤋
bonds that can be bought back by the issuer are called "callable bonds" aint too much of a finance guru but i tink u shuld go to google and search for "callable bonds".
2006-10-18 07:07:04 · answer #8 · answered by lukendayit 1 · 0⤊ 1⤋
It means they think its undervalued and there is no better place for the company to invest its dollars.
2006-10-18 06:43:46 · answer #9 · answered by Anonymous · 0⤊ 1⤋