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daggfish

02/26/11 1:31 PM

#134394 RE: gump90 #134386

Companies do it all the time here in the good Ol USA
Companies can buy back common stock in two ways: either offer to buy a certain number of shares at a specified price (which is what Eagle777 is referring to with the VWAP volume weighted average price for the day ), which is known as a tender offer, or simply buy back stock on the open market over time.

Employee Stock Options
Many companies offer stock options to employees and must buy the shares from the general public to give to their employees as part of their pay.

Protecting Against a Takeover
A company that fears an investor or group of investors is attempting a hostile takeover of the company may repurchase shares to prevent that person or group from gaining a majority stake in the company.

Using Extra Funds
A company with extra funds can buy back stock from investors to make the remaining stock in the company more valuable because it represents ownership in a larger percentage of the company.

Artificially Alter Ratios
A company can buy stock to increase its earnings per share or price to earnings ratio and to decrease the amount of shares the earnings are based on.

Investing in Itself
A company that has excess cash reserves and believes its own stock to be undervalued by the market can repurchase shares now and resell them if and when the stock price rises.



Read more: Reason a Company Buys Back Common Stock | eHow.com http://www.ehow.com/facts_5268509_reason-buys-back-common-stock.html#ixzz1F5i0YkP3