I thought taking debt was a bad thing? I'm not too educated on high finance so maybe someone else can shed a little light on this for me. All I know is that I hope part of that unsecured loan-shark money goes to pay my likely upcoming severance.
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These responses are hilarious...... I see many of you don't know how business works.
Post at the top is dead wrong. Wall St. did not love it at all. The stock price is still close to the lowest it has been for the last year. A lot of people say that stock prices reflect the expectations for the future of the company. So it looks like the market does not have a rosy outlook for us.
They said on the last earnings call they were going to borrow the billion $ and use it for share buybacks (going out and buying WFM stock to decrease the number of shares of stock out there on the market.) Buying back shares decreases the number of shares outstanding and so increases the earnings per share. It does nothing to increase sales or profits. Share buybacks do nothing for us TMs, nothing for the customers, and nothing for the future of the company. All it does it increase earnings per share outstanding which I guess in the long run is good for those that hold large numbers of shares.
I would actually be way more comfortable if they were plowing the billion into growing the company by doing something like opening stores: WFM stores or 365 stores. Why borrow a billion dollars and not use it in a constructive way to increase sales and profitability? These people at the top just kill me with their decisions sometimes.
They are tied-up in so many new leases, in order to reach their promise of 1200 stores, all in all to please the investor public. Where else is the money going to come from? As long as it's not their pockets, who cares!
From a debt-free company and then they borrow money, that tells me something, WFM is beginning to have a cash- flow problem. JMHO
Yes, nothing says "success" like saddling investors with a billion in debt so you can buy back stock to hand out like candy to top management. I suspect that this is what they'll do with most of the money. I agree with EKSrfGB-qfv: Exactly what will management pull out of the hat next year at this time? Overall, stock buybacks are management's way of admitting that they don't have any good ideas for increasing the ratio "earnings per share" except by reducing the denominator.
They do this to inflate the price of the stock to either sell off the company and or so the big guys at the top can dump their stock at a higher price before they all jump ship.
The company believes in miracles! Let's wait and see what leverage they will use next year same time.
The company is doubling the size of its debt sale to $1 billion in bonds, now has a bbb- rating with a negative outlook. One step away from being 'junk' stock.