Originally Posted by
jdborg
Yes, that's exactly what stock buybacks do. That is the purpose. They increase the value of the remaining stock outstanding by reducing shares outstanding. The benifit of this over dividend increased is that the now more valuable stock will not be taxed as dividends would be. So yes that's exactly why they do it. To enrich the share holders.
Well you kind of changed your argument in this. At first you said they do it to enrich themselves, then you say they do it to enrich the shareholders. Well, I am a shareholder as well, so in essence they are enriching me too, and I like that; IF your argument holds water.
Would you acknowledge that management has a fiduciary duty to the owners of the company?
I believe - I do not know - that the stock buyback is an attempt to placate the hedge fund managers and large institutional investors that hold large blocks of DAL. Why do they need to be placated? Those same investors see that 1/4 of DAL's profits last year were paid to the employees in profitsharing, and they find that unpalatable. Not our problem you say? I agree. But it is management's problem, and they need to solve it hence the buyback. Actually, I agree with you in a sense as buying back $5 billion worth of stock will do nothing to move the stock price in any meaningful manner. (We have 800+ million shares outstanding) It's just business, nothing as nefarious as some make this out to be. If they REALLY wanted to enrich themselves they would attempt to take us private. Ask the NWA guys how well THAT works out.