4 ms·
It's a signal that the finance people are becoming more important to the company, but not necessarily a bad thing; it's effectively a more (tax) efficient form
by stingraycharles 9mo ago
It's a signal that the finance people are becoming more important to the company, but not necessarily a bad thing; it's effectively a more (tax) efficient form of dividends, which isn't very controversial.
ASML is a fairly old company (40+ years), and they have been doing share buybacks since 2006: https://www.asml.com/en/investors/why-invest-in-asml/share-buyback https://www.asml.com/en/investors/why-invest-in-asml/share-b...
- tehmillhouse 9mo agoEvery time I can remember that the finance people have become more important to a company, it has led to the disappearance of the internal culture geared towards excellence that got a company to that point in the first place.
- Cthulhu_ 9mo agoThat's what they're afraid of, and that's one of the reasons why they're doing the big management reorganization - too many managers leads to lots of overhead instead of excellence.
- repelsteeltje 9mo agoI guess it's simply the externalities issue. Finance people optimize finance, which among other things results in improved efficiency. But despite best intentions to map out all incentives that matter, it always fails to consider some aspects. Focusing on short-term profits, ignoring privacy, security or pollution because it's free, lobbying for favourable legislation that hampers competitors, etc. These are things that don't show in a spreadsheet unless you're explicitly incentivized to look at them. But that's never the case because the number of KPIs is always finite while there are infinitely many aspects that could potentially be subverted.
- Gud 9mo agoWhy does "optimizing finance" improve the efficiency in an engineering company? Seems to me like "optimizing finance" could be absolutely detrimental for the bottom line.
- repelsteeltje 9mo agoI guess I meant to say: "finance people optimize the company 's financials"
- stingraycharles 9mo agoIt’s largely true. I believe Steve Jobs had some talk about this phenomenon; basically, at some point, the scale of an organization means the product people make less of an impact than the sales / finance people, and they slowly take over. Then over the span of a few decades, what’s left is a shallow organization without real innovation. Intel and Boeing are good examples of this.
- askvictor 9mo agoAnd, indeed, Apple.
- hayvan 9mo agoIndeed, finance people becomeing important is how you get 737-MAX disasters.
- jorvi 9mo agoBut both dividends and stock buybacks are terrible and really shouldn't exist. In a proper market, competition is so fierce that you cannot afford dividends / stock buybacks because your competitors will put all their money towards R&D and retaining & attracting the best personnel. Then again, this has been going on for decades. Businesses used to be about being the best for your customers and personnel. But it's all become about sticking it to everyone for the benefit of the shareholders.
- tonyedgecombe 9mo agoWhy would anybody invest in a business that never produces a return?
- lotsofpulp 9mo agoIdeally, people wouldn’t have any money to invest because they all earn the same amount, which they all spend on the same expenses, otherwise it gets taxed and redistributed.
- tonyedgecombe 9mo agoWhich is incoherent as it works against human nature.
- jorvi 9mo agoThe return is in the increase in value of the stock? Dividends have only existed since the 1960s and stock buybacks only became mainstream in the 1980s. Stocks have existed in some form since the 1600s.
- blibble 9mo agoyou realise most companies are private and don't have publicly tradable shares? very common: a small company with a couple shareholders of that aren't employees without dividends, how can the shareholders get THEIR profits out of THEIR company, without giving up control? just leave them in there forever?