The company is proposed to buy back share from T$38.5 to T$95. In Taiwan, TSM was closed at T$55 down T$4 (about 6.8%). It looks like TSM dropping to its daily limit of 7% in Taiwan. So, I expect to see this one going down another 7% tonight (or tomorrow in Taiwan).
There is a daily limit of 7% up/down. If it goes up/down to 7% limit, the stock cannot go any further. So, there were ASK of $55 at the close. If you try to get rid of your position at lower price, you have to put on $55 or to wait for tomorrow at lower price. Obveriously, it is not a free market. The government controls the market. They have funds to support the market.
kids, it is a joke for TSM to do the buyback. They need to raise up the $2.0 Billion capex in Y04 by the secondary offering (in Q2 or Q3). On the other side, they will pay the cash divdend this year to avoid further stock dilution and cause the erosion of stock price. Hehehe, now stock buyback, what a joke.
kids, read the news carefully, they "proposed" to buy back from NT$38.5 to NT$95 (US$6.37 to US$15.72). And it also didn't state they "will" buy back, or they "have the obligation" to buy back.
kids, use your head to think. There is absolutely no chance for TSM to do the buyback. They are just talking and try to stir the price up, so they can do the secondary offering. Hehehe, this is the old trick in wall street, kids.
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.