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Hewlett-Packard Company Message Board

  • organic_chemical organic_chemical Oct 7, 1999 3:35 PM Flag

    Share buyback,

    Someone (sorry can't remember who) recently said
    that in CF's
    recent conference call she mentioned
    an aggressive share buyback.
    Does anyone have
    any more details? I have mixed feelings about

    such a plan. On a historic level, HWP's valuation is
    on the high
    side and it may be more prudent to
    plug excess funds back into
    the business in order
    to support and hopefully increase the
    valuation.
    The only time an "aggressive" buyback is essential is

    when the share price is relatively very low.

    Thoughts anyone?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Agreed! I'm definitely NOT against employees
      sharing in the success they generate (I have options
      granted to me too). I'm interested that companies stick
      to making things and selling them. They should NOT
      be playing at Stockbroker. Or worse, employing
      tactics to artificially support their own stock price by
      trading in their own shares.
      [In an auction, this
      would be called "ringing" and is illegal, here at
      least!

      I do think that the solution is that all stock
      options should be NEW issued shares. Bought off by
      shareholders at the AGM for that specific purpose, with them
      fully cognicent of the dilutive effect it will have.
      For a successful company, that's not a problem -
      especially if shareholders can see the benefit of the "perk"
      to their workforce.
      If the number of shares
      issued becomes too high via such dilution, they can
      redeem by a "3 for 4" reverse split, or whatever ratio
      is desired.
      Any company going to the Market and
      buying its stock is only going to do it when they feel
      it's at a low price. There is no obligation for them
      to state (in real time) that the demand was
      "internal". Declarations are currently made only months
      later.
      This is inequitable, representing an unquantifiable
      downside risk to shareholders.
      Stay lucky, good
      discussion!
      Chap

    • But she's NOT giving any back to the
      shareholders!
      >>Not yet, but it Carly is right, everyone will
      benefit. That is why we pay $90M to her to increase
      shareholder values. So why not so the same for HWP's top
      performers as well.

      If the shares aren't retired from
      circulation, the money the employees get comes DIRECTLY from
      the owners of the Company.
      >>That is true,
      but that goes with employee salary and benefits.
      There needs to be a balance right? Shareholders do not
      expect everything for nothing right?

      My company
      issue new shares, voted in by the shareholders at the
      AGM. (I think HWP do the same?)
      >>I am sure
      the board & shareholders will have a voice
      indeed.

      Problem with any such scheme is that employees
      (especially highest paid, with LARGE option awards) get used
      to thinking that the value of those options is just
      "magicked" up. It isn't.
      >>That is absolutely a
      problem and that was why I brought up Cisco's plan that
      70% to 80% of the options go to non-managers who
      usually got the biggest salary & bonus.

      It is an
      investment in THEM, by their Company' shareholders.
      I
      regard option-derived share sales of $Millions by senior
      employees as a statement of their lack of confidence in the
      Company. Annual sales from these people are an obscene
      multiple of any realistic annual salary expectation. They
      almost never buy back when the share price is
      low....just try to sell as many as they can when they think
      it's high. They don't care one jot for their
      benefactors.
      >>No doubt JJ agreed with you. I do as well. That was
      why I admired the hippie Steve Jobs who got 1 share
      to have the previlege to work 100 hrs a week at
      Apple. Poor Carly should have done the same just to have
      the chance to be HWP's CEO while breaking ground as
      the top female executive (business) of the
      world.

      Stay lucky
      >>You too.

      PS: Recalled
      that you told me the somewhat social system at UK.
      Here, it is becoming more and more "Me first" system.
      It is the reality that I must face, like it or not.

    • I'm a big believer in employees owning stock in
      their Company. The longer they stay, the more they can
      share in the success of their company. But sensible
      grants please!
      Donating stock to employees is plain,
      simple, extra remuneration. The stock has latent value
      when awarded, and real value when
      excercisable.
      Stock options should ALWAYS be from new issue shares,
      so that shareholders can see the dilution effect -
      and balance it with the performance and growth of
      their company.
      The shareholders share of the company
      is gradually diluted. Yes. But they can see very
      easily if the dilution is outweighed by
      perfomance.
      They can also see if the per-employee free issue is
      equitable and likely to yield a good result.
      The Problem
      With Big Stock Option Awards:
      It's like pyramid
      selling......everything is OK while growth is high. The price paid is
      always "tomorrow", via dilution.
      But what happens
      when there are 100M shares issued, but over the next 5
      years, there are 10M shares due to be excercised? New
      shares? And business is tough.
      The company will start
      a downward spiral. Option holders sell at the first
      opportunity, investors follow. Then everyone realises that the
      stock price thought "fair" was a figment of the
      imagination. Everyone involved had been doing everything
      possible to keep the "old" price up. Including the company
      itself spending large chunks of shareholder cash to
      create a false impression of demand for the
      stock.
      Stock option obligations are a hidden, MAJOR downside
      to the real value of many companies. They must be
      kept to sensible proportions, equitable across the
      whole workforce, and closely monitored by all. On no
      account should a company EVER be allowed to deal in its
      own shares! If they want to increase per-share
      valuation, all that's required is a 3 for 4 reverse split,
      for example. Or pay a DIVIDEND!!!!!
      Stay
      lucky
      Chap

    • so, Carly is saying to the stockholders that she
      is going to spend $X Billion of THEIR assets, and
      just give it away?
      OK, she's going to give it to
      valued employees.
      But she's NOT giving any back to
      the shareholders!
      If the shares aren't retired
      from circulation, the money the employees get comes
      DIRECTLY from the owners of the Company.
      I get stock
      options too (not HWP though).
      My company issue new
      shares, voted in by the shareholders at the AGM. (I think
      HWP do the same?)
      Problem with any such scheme is
      that employees (especially highest paid, with LARGE
      option awards) get used to thinking that the value of
      those options is just "magicked" up. It isn't.
      It is
      an investment in THEM, by their Company'
      shareholders.
      I regard option-derived share sales of
      $Millions by senior employees as a statement of their lack
      of confidence in the Company. Annual sales from
      these people are an obscene multiple of any realistic
      annual salary expectation. They almost never buy back
      when the share price is low....just try to sell as
      many as they can when they think it's high. They don't
      care one jot for their benefactors.
      Stay
      lucky
      Chap

    • If you were trying to get help for your company.
      You found your man/woman working at ibm or just
      graduated from U of New Mexico.

      Assume that you have
      to compete with me and I am offering 2K options to
      sign on (Bill Gates did the same thing when he round
      up thousands of programmers to write codes for
      Windows). What are you going to do? Do the work yourself?
      Get inferior help? Decline the business? Put your
      payroll in CDs or invest in my company?

      Just a
      thought.

    • Pages 59 & 61 of the 10/18 BusWeek showed ads for
      E60 NetServer and OmniBooks.

      Before CArly's
      realignment, all I saw was e-service ads. It is about time. It
      is okay to see 2 pages of E-services Ad on P196 &
      P197.

      Besides the Telecon, Carly will appear
      12/1 in San Francisco's "The Digital Economy"
      conference. In the flyer, it mentions e-business, e-driven
      but not E-services. Wonder if Carly wants us to get
      back into the main stream and not trying to fool
      anyone with this nonsense of writing the first chapter
      on E-services.

      Only time will
      tell.

      Also, just caught up with my reading on the most
      powerful women in Fortune's 10/25 issue. Interesting
      notes:

      1. Carly chose Lucent's logo ...partly because it
      reminded her of her monther's paintings (her mother died
      last Dec at 77).
      2. Ann Livermore at #13 was quoted
      "Everybody wants to write that Ann's pissed off and that she
      wants to leave HP," ..."That's not my story. I'm not
      going to leave."
      3. Carolyn Ticknor (#35), makes HWP
      provided 3 of the 50 names on the list.

      Hurray for
      Lew...trouble with this picture is that all the hype of
      diversity are at the top level. In my work group, all
      functional mangers are white men. Lew has succeeded to
      change the culture at the top. He was unable to inspire
      the troops. Hope Carly can do so to earn her $90M
      package.

    • regarding the philosophy of the stock
      buyback.

      It looks like Carly will be doing some good things
      for us this next week. She's speaking at the Telecom
      '99 get together in Geneva. The other speakers will
      be Bill Gates and some representatives from IBM,
      Sunw, and others. Sounds interesting.

    • Well said. I like the way you think and express yourself.
      We need unity.
      Sonja

    • as the rest of you birds. Yes, stock is one of
      many parts of compensation and is useful. But, if I am
      running a company my objective is to maximize profits and
      associated elements. In thus doing, I choose where I can get
      the best return for my money. If investing in holding
      my own paper is viewed as a good strategy to
      accomplish that task then I do so as part of a grander plan,
      and I seperate the issue of options, my rewards, and
      stock value from sound financial policy. That's it.
      Nothing else. I invest the dollars where I do the best
      for the company. That is my swarn fiduciary
      responsibility. I'm not running a welfare roll or a
      lottery.

      Squawk, squawk, squawk, caw JJ

    • >Buyback statements seek only one thing: to
      hype the value of the stock.

      Here's some more
      thoughts on the matter for you Chap.
      The good folks who
      work for the company are concerned about the stock
      price. They too are owners/shareholders. Part of their
      compensation is in company stock via the stock purchase
      plan.
      So unless you take that away and have an entire
      company of upset employees, the employees will get stock
      periodically. All of them, not just the high flyers. (At least
      the one's who participate in the optional program.
      Most do.)

      So you can give them the stock
      they've earned by doing their job by printing more stock.
      But then you have a very large amount of stock enter
      the float every 3 months, which would dilute the
      stock value. Instead you can buy it back on the open
      market to distribute at the appropriate times. Voila -
      no dilution.

      Employees happy and stockholders
      happy. Since the company has to buy stock the
      responsible thing would be to buy it when the price is
      attractive. Carley et al seem to think now is that
      time.
      This is good since there will be a distribution in
      early Novmeber.

      Me --

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