Do they just repurchase shares and give them to management? Page 4 of the slides for the earnings call shows we had 808M shares outstanding the 1st and 2nd quarters. Yet in the second quarter we bought back 3M shares. How can the number of outstanding shares remain the same???
8 replies (most recent on top)
Is zacks truly that stupid? Why do they think anybody thought buybacks affected revenue or profit??? What they describe is essentially every corporate purchase. The only question would be what happens to the stock after it's bought. Everyone already knows that buybacks entail using profits to buy stock.
From zacks finance...
A stock buyback is solely a balance sheet transaction, meaning that it doesn't affect the company's revenue or profits. When a company buys back stock, it first reduces its cash account on the asset side of the balance sheet by the amount of the buyback. For example, if a company repurchases 100,000 shares for $50 each, it would subtract $5 million from its cash balance. In the equity section, the company would increase the "treasury stock" account by $5 million.
They take the repurchased shares and use them for any and all business needs, including travel to the the World Economic Forum in Davos-Klosters, Switzerland .
if they are physical stock certificates, they are recycled into TP on 14 in 240.
I was wondering if it had something to do with them being "average" outstanding shares. But it would still be funny that the averages were the same unless all repurchases were the last day of the quarter and didn't affect the average enough.
To the second commenter, that is a good point. (I am the first commenter). Off to do some research now for myself.
It doesn't seem like share purchased for their portfolio would be classified as a repurchase.
Interesting question. They repurchase shares to increase earnings per share and as a pay of returning capital to shareholders. If they just gave them to management, EPS would not increase. It is possible that they purchased the shares and are holding them in the firm's own investment portfolio.