NY Times versus stock buybacks

For some reason the NY Times seems to have become anti-stock-buyback lately. After an article criticizing them a couple of weeks ago, today's business section has a similar piece from Gretchen Morgenson. She makes some strange claims during its course.

For instance, she says that corporations doing stock buybacks
"make earnings look better on a per-share basis." The "look" is very weird here: earnings are better on a per-share basis after a buyback! (Or losses are worse.) Same earnings / fewer shares = more earnings per share!

And she takes the same tack here: "These [stock buybacks] helped increase Yahoo! News earnings per-share about 16% annually... But a good bit of that performance was the buyback mirage." But what "mirage" is she talking about? Buybacks really make earnings per share better.

A little later, she notes that "Mr. Colby pointed out that buybacks provide only a one-time benefit..." I'm sure he did if she says he did, but it is also her responsibility to tell her readers Mr. Colby is nuts if he said that. If I owned 10% of the company before the buyback, but 12% afterwards, that benefit is permanent. It does not go away after a week or a month.


  1. How was the buyback financed? If debt was used, e.g, Miller-Modigliani applies: earnings net of debt service per share should be unchanged.


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