I was reading an article on Reuters today and it really resonated, discussing share buybacks. As shareholders, we all like them, mainly because we think they’re going to increase shareholder value.
But are they?
Corporations are now spending more on buybacks and dividends than net income. WTF?
You know the guilty parties: IBM, HPQ, as well as scores of other failures. These CEOs are simply golfing all day, buying back their own shares, firing workers, then having their lunches eaten for them by competitors. I have to believe HP would’ve been FAR better off spending all of that money on innovation or accretive aquisitions.
Now we have all of these fucktard activist shareholders demanding large buybacks, simply to make a quick buck. All the while, innovation is being stifled. Apple and Samsung are innovating plenty. But, you have to admit, the vast landscape of former tech heavy weights is dwindling down to a select few.
The financialization of America is at hand. Get off the golf course you lazy fuckers and into the boardroom.
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I would say not so much lazy as supergreedy. I’m sure the banksters are desperate for fees and these CEO’s only too happy to help
I’ve always believed excess greed is a form of sloth.
Are there any studies on annual returns for companies whose r&d spending starts cutting back to certain levels? Maybe add payrolls to the mix?
These companies are like landed gentry and I have no doubt they will be swept away during the next conflagration.
I’ve tried to figure out why they buy back common stock
instead of preferred .I know they are treated differently
on the balance sheet but eliminating the interest payout would
help their bottom line.
As bears said in that ’12-’13 range human nature would not fail to trap itself in a corner. Accused as fuming inadequate ticking time bombs for being on the wrong side. (Looking more right?)
So operating profit has now become net income:
06/26/2015 Companies have started paying out more to shareholders than they produce in operating earnings. The last time spending on buybacks-plus-dividends exceeded operating profit Q2 2007
Macy’s is another example. Shareholder value vaporized now that the stock has tanked. Nary a mention amidst much chatter about inventories, sales, and how great the Macy’s management team is (was). Maybe they could have invested more in e-commerce, but then that would be risky.
At least some are honest. Arthur Sulzberger, Jr. has said the greatest mistake he made as Publisher of The New York Times was the stock buybacks of the 1990s.
Well my handicap has improved to 8.
Last week NantKwest, (NK) announced a $50 million share buyback. NK IPO’d in August with an upsized market value of $200 million. Proceeds from the IPO were expected to be used to develop immunotherapy treatments for cancer. They spent $3.9 million on research in Q3 and had a $43 million operation loss.
Lockup expiration is coming up in January and it appears that management decided that getting the stock price higher ahead of the lockup expiration was the best use of funds.