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Taiwan Semiconductor Manufacturing Company Limited Message Board

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  • CHIUNTA CHIUNTA Mar 23, 2004 10:30 AM Flag

    Propose to Buy at T$38.5 to T$95

    Quoting CFO Magazine:
    In fact, many finance executives believe repurchase programs send a clear signal that a company's stock is undervalued. By scooping up outstanding scrip, they say a company is able to steady the nerves of jittery shareholders. What's more, a buyback reduces the supply of shares on the open market. That, buyback backers say, eventually drives the price of a company's stock up.

    And in fact, a study conducted by Prudential Securities analyst Ed Keon would seem to bear this out. Keon looked at all the companies that conducted buybacks from 1984 through the second quarter of 2001. He found that corporations that reduced their outstanding shares by at least 1 percent generated greater annualized stock returns than the S&P 500 index.

    But, if you believe they are just words, you can wait about a week and see if there is any action taken. However, the covering price might not be as good as today when their market is closed.

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    • That article didn't tell you more than 85% of the buyback announcements in the wall street have never materialized. There are three stage of buyback:

      1. announcement the "intention" to buyback (as happened at TSM today).

      2. Board meeting to "authorize" the buyback (normally specify price, total amount, and period of buyback). Anuthorized to buyback doesn't means they will actually do it.

      3. "Actual buyback". The amount of actual buyback normally is much less than the authorized amount for various reasons. Company only do the buyback if and only if they HAVE TO DO IT.

      You have to read the quarter report to find out how much the buyback has actually happened or it never happens.

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