Regarding INTC shares, as a corporation they're generating huge profits, the question is who are the beneficiaries. The analysts should be beating up management.
Accounting gurus may chime in, but stock repurchase doesn't hit income other than changing diluted eps. IIRC the repurchase in excess of issue price hits retained earnings. They also state they want to limit dilution to 2% / year.
As far as the scale of the repurchase activities, From the July '05 10-Q (Q3 isn't up yet) $4.3 B of the $6.7 B operating cash flow in 1H05 went to stock repurchase, while net income was $4.2 billion and dividends were $990 million.
From the 2004 annual report, Of the $13.1 billion in operating cash flow, about $7.5 billion went to stock repurchase. Net income for 04 was right at $7.5 billion, so the hit was significant and dividends were $1 billion . Note 4, pg 57 shows $7.5 billion spent to repurchace 301 million shares, while the shares outstanding only dropped 127 million.
If you look at the 2004 report(pg 56, note 3), you'll see that ~350 million option shares were excluded from the outstanding shares since they're underwater. P65 shows the number of options outstanding by range of exercise price. The 10-Q's don't show the same detail.
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