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For technology companies, buybacks signal to me that they have dying (or dead) engineering. It is rather financial engineering at work. One of the kpi at play
by zxienin 7y ago
For technology companies, buybacks signal to me that they have dying (or dead) engineering. It is rather financial engineering at work.
One of the kpi at play here is EPS [1], typically used to evaluate CEO performances.
To me, this was about numerator increasing over a rather static base.
What instead happens, is that denominator is reduced (with buybacks) to jack up EPS value. It amazes me, that most of run-of-mill (non analyst) folks simply buy into EPS↑ story.
[1] https://www.investopedia.com/terms/e/eps.asp https://www.investopedia.com/terms/e/eps.asp
- Redoubts 7y agoI can understand this. I know my company has a bug backlog a mile long, and some real issues we should put substantial time into; but it would rather have HR put downwards pressure on compensation while pursuing record buybacks. It gives a sense for what the priorities are.
- frockington1 7y agoWell a bug backlog that long isn't going to motivate execs to improve compensation. If there are too many bugs it might be time to pivot the business
- Redoubts 7y agoOf course I don't mean more money for existing players, but to encourage strong new hires. But good talent tends to cost money, so...