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From a basic economics perspective, companies conduct buybacks when they have no other use for the money. Since re-investment supports shareholders on a longer
by boh 3y ago
From a basic economics perspective, companies conduct buybacks when they have no other use for the money. Since re-investment supports shareholders on a longer timescale, Intel has essentially let the market know they don't have any other use for the money they have. The point of investing in a company is the funds to be used to generate wealth. If I invest in your company and you just give me back my money, what's the point of the company (especially if its money requiring extra leverage to produce). Buybacks are inefficient use of invested capital (see NVidia's stock price if you need a comparison for a more efficient use of cash and its effect on shareholder value).
- gizmondo 3y agoWhether they are efficient or not entirely depends on the company. For every NVidia you can find another company (or ten) that reinvests inefficiently because managers tend to like building empires at the expense of their shareholders.
- boh 3y agoOf course. Intel, specifically, does not make a compelling case that they spent their cash efficiently.