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I worry that addiction to stock buybacks is a terminal disease for companies like IBM. Imagine what $65B invested in R&D over the last eight years could have y
by femto113 7y ago
I worry that addiction to stock buybacks is a terminal disease for companies like IBM. Imagine what $65B invested in R&D over the last eight years could have yielded in the future instead of being poured down a financial sewer.
- throwaway55554 7y agoThey used to be illegal. They should be illegal again. If they were, then that $65B would have been invested in R&D (and in their employees!).
- robocat 7y agoThe money would have been returned as dividends instead. For-profit companies are not intended to exist just to spend all profits on themselves (although Amazon is one obvious counter example amongst many).
- cpwright 7y agoOr paid as dividends? Stock buybacks are in part a way to financial engineer around dividends and capital gains being realized and taxed differently.
- robocat 7y agoStock buybacks are yields for shareholders the same as dividends (just with different tax implications) - definitely not “down the sewer”. Most companies have a limit to the amount of R&D they can do before running into a wall where the payback becomes unprofitable (for complicated reasons).
- PopePompus 7y agoIsn’t a stock buyback a way of telling their shareholders “we think you would be better off investing your money elsewhere”?
- redis_mlc 7y agoNo, it's a way for execs to get the EPS up, and thus their options up, without, you know, increasing revenue or inventing anything. Seriously.