Re:Stock buybacks are dangerous for the economy
by throw0101a on Tuesday March 17, 2020 @02:38PM
(#22608482)
That is not what they signal: buybacks say "we have this cash that we can't find an internal use for, so we're returning it to the owners of the company".
They are a form of returning capital, no different than dividends.
If a company cannot figure out a way to use all the cash it has available internally (e.g., not enough R&D for all the cash), then why shouldn't it be allowed to return the cash to the owner of the company? How many years did AMZN produce 'zero profit' because they were funneling every penny back into the company? Was that a bad decision?
Re:Stock buybacks are dangerous for the economy
by airstrike on Tuesday March 17, 2020 @02:53PM
(#22608689)
The argument goes: if they thought the stock was overvalued, they would not buy it back and would let the cash sit on the BS until a more opportune time came along.
They are a form of returning capital, no different than dividends.
If a company cannot figure out a way to use all the cash it has available internally (e.g., not enough R&D for all the cash), then why shouldn't it be allowed to return the cash to the owner of the company? How many years did AMZN produce 'zero profit' because they were funneling every penny back into the company? Was that a bad decision?