SOARING CORPORATE PROFITS PROMPT STOCK BUYBACKS.Byline: Duncan Martell Bloomberg News Companies are launching stock buybacks Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. and declaring stock splits as their shares reach records even while concern mounts that U.S. stocks may be overvalued Overvalued A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a . Two of the largest U.S. companies, Philip Morris Cos. and Merck & Co., said this week they plan to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. as much as a combined $13 billion of stock in three years. Philip Morris also declared a 3-for-1 stock split. Flush To empty the contents of a memory buffer. See buffer. Flush Elizabeth Barrett Browning’s spaniel, subject of a biography. [Br. Lit.: Woolf Flush in Barnhart, 446] See : Dogs (data) flush with cash from strong profits, U.S. companies are using extra earnings for buybacks after exhausting options such as making more acquisitions or investing more in their main businesses. ``These companies are so cash rich, what are they supposed to do? A lot of the these guys are sitting and scratching their heads,'' said John Hammerschmidt, a money manager at $2.5 billion Turner Investment Partners, which owns stock in Merck & Co., Philip Morris Cos., Intel Corp. and Microsoft Corp. So far this year, companies have announced $29.7 billion in stock buybacks, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Securities Data Co. In the same period last year, $28.5 billion in buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may plans were announced. Last year, a record $176 billion in buybacks were launched, Securities Data said. The announcements from Philip Morris and Merck come as U.S. stocks tumbled on Federal Reserve Chairman Alan Greenspan's warning that the central bank may raise interest rates to head off inflation. Rising interest rates increase borrowing costs for companies, which in turn can hurt corporate profits. |
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