The following is an excerpt from Suzanne McGee | December 22, 2011 | Thefiscaltimes.com |
Whatever the economy fails to deliver in the way of higher earnings per share in the fourth quarter, companies may be generating themselves simply by using some of the surplus cash on their balance sheets to buy back their own shares.
That’s the message in the latest report on corporate stock buyback activity by Standard & Poor’s. In the third quarter, buyback activity hit $118 billion, nearly 50 percent above year-earlier levels. But the big news, says Howard Silverblatt, senior index analyst at S&P, is that companies are buying back more shares than they need to in order to cover the dilutive impact of issuing options to employees or other similar purposes.
Indeed, Silverblatt calculates that nearly a fifth of the S&P 500 companies have trimmed their outstanding shares by at least 4 percent in the last year. Theoretically, even if those companies see……….
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