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Right, but should they spent 90% of their free cash flow doing a stock buy back? Not a sound business practice IMHO.

• asino 6y ago
  When a company (or anybody) has cash can do 4 things. (Assuming that the level of debt is sustainable.) 1 reinvest in new projects 2 put the cash on safe assets (bonds) 3 buyback 4 give back as a dividend Buyback is more tax efficient than dividends. What would you have done,if you were Boing CEO?
  • wonderwonder 6y ago
    Your comment is missing the point that you can do all of these things at once. They could easily put 80% into safe assets / employee 401ks, new project funds etc. and then spend 20% on buy backs. The focus on buy backs is due to the fact that American business ties executive bonuses to share valuation.
  • gshdg 6y ago
    The GP’s point is that the system that incentivizes this is flawed and needs to change. Do you disagree?
  • michaelt 6y ago
    > What would you have done,if you were Boing CEO? If you're Microsoft or Apple or Google, the answer is "Hold hundreds of billions of dollars of cash" [1] That article, from late 2019, feels such holdings are in need of explanation; today, they seem like common sense. [1] https://www.cnbc.com/2019/11/07/microsoft-apple-and-alphabet-are-sitting-on-more-than-100-billion-in-cash.html https://www.cnbc.com/2019/11/07/microsoft-apple-and-alphabet...