You start to confuse me Zeev. First we discussed about the merits of dividends via stock buybacks and now you come up with another point. -g-
The difference in DELL's current tangible book and the original capital raised in the market does not tell us anything about how much wealth the company has created for its shareholders. As jd pointed out, the wealth created to shareholders is the difference between their purchase price at cost and the price now.
The corporate wealth created also is not simply the difference between current net tangibles and capital raised in the market. You forget about the huge sums the company has spent for stock buybacks which in your view were better spent for dividends.
Jd mentions an important point but oversees another one. Miller and Modigliani Jd? In the end you want to tell me that the CAPM is right as well. -g- Technically you may be right that dividends and buybacks are economically equivalent, but I said that stock buybacks are of bigger advantage under one condition. That advantage of stock buybacks is only available to these investors who buy and hold, because the stock buybacks increase their stake in the company without them having to purchase additional shares. That's one of the reasons for Buffett's yields, he does exactly that and encourages 'his' companies to implement buyback programs.
The capitalization would have been the same in either case (fewer shares times higher price), and stockholders would have been no better or worse off. The capitalization would be the same, yes, but with constant buybacks your stake would be higher Jd.
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