2006-10-27 11:24:10 · 3 answers · asked by asherpaton 1 in Business & Finance ➔ Investing
When a company buys back some of their stock to increase the earnings per share (EPS).
2006-10-27 11:44:59 · answer #1 · answered by joe s 2 · 0⤊ 0⤋
When a company does a stock repurchase it buys back its own stock. And that stock is then called treasury stock on the balance sheet. Treasury stock is essentially currency. It can be sold again later when the price goes up to raise cash. Or it can be used for acquisitions which would be tax free to shareholders of the acquired firm, until they sold the shares. Stock repurchases also reduce the number of shares outstanding and artificially raise earnings per share.
2006-10-28 01:51:12 · answer #2 · answered by jeff410 7 · 0⤊ 0⤋
In my opinion it is a waste of share holder money. Pure and simple. What the company is attempting to do is support the price of the stock and show apparant earnings growth by reducing the number of shares. It adds no value what so ever. In the case of Dell Computer they bought billions of dollars worth of stock at prices 10 points higer than the stock is currently selling for. Of course that does not show as a loss on the books, but it should.
2006-10-27 20:29:13 · answer #3 · answered by Anonymous · 0⤊ 0⤋