"Yes, on a theoretical basis, pps should adjust for more shares outstanding on the same market cap, just as is should have adjusted on fewer shares outstanding when 17 per share bought stock back."
Huh? Market cap is based on total shares outstanding not float.
OK Dar, I admit you've created another "furball".
Made a few people think and even created some comic releif.
Even got some good answers from Maverick and Slegemark.
But ..... since we've now devolved to "drivel" you've got to admit that my original answer was correct and ..... NOW I WANT MY PRIZE!
But ..... since you're a stingy old fart, I know that you'll never pay-up.
So ..... in leiu of MY PRIZE, I'll settle for your opinion on how shareholders MAY be impacted. You can even use some of my subsequent posts as a springboards ..... but,THINK DEEP.
Why I open myself up to this kind of abuse I'll never know.
Maybe I AM just an another old fart with too much time on my hands during the winter.
Here we go again.
BTW, when I assert an economic benefit from receipt of shares, I must concede a 19 cent dividend.
If I were to assert a 56 cent dividend (or whatever the total is upon immediate sale of shares), I must concede no economic benefit from receipt of shares.
The stock dividend is one or the other. It cannot be both.
Tax consequenses are a completely different issue. I can sell the stock dividend shares for less tax than a qualified dividend simply by selecting the lot with the highest adjusted tax basis to cover the sold shares.
Well, we will just disagree. The buyback was a great deal (a rarity among corps buying back stock), but the shareholders are gaining nothing by the stock split. Just a PR move, unless they accompany it with an undisclosed move.
A buyback in and of itself at the immediate time of the buyback, does nothing (in theory). The magic of a successful buyback is in permanently reducing the outstanding shares in advance of improved performance. Better results accrue to fewer shares, resulting in higher prices per share (holding multiples constant).
A stock split/dividend is different, and studies back up that stock splits do nothing. The future enterprise value will be $X, regardless of the number of shares outstanding.
"Debit treasury stock 153 million
Credit cash 153 million
Debit retained earnings 306 million
Credit treasury stock 153 million
Credit additional paid in capital 153 million
What happened to the shareholders??? "
Ok, the books take a debit of 153M in stock. That is the approximate cost to us to originally buy back stock that was issued to us as a dividend. I don't know how that translates to a 153m credit other than that is the effect of not paying cash out.
The second set of statements:
debit retained earnings 306m is about the cash equivalent of issuing the stock divy.[841mshares x.0107 x 34]
second line of second statement credit 153m treasury stock is the temporary value of stock not paid as dividend. It is a credit, sort of, because the stock was added last year during a buyback.
third line paid in capital of 153m . I might extend that word to "paid in kind" capital, because it is not actual income but the appreciated value of the 9million shares sent out as divy is still capital. But I have no training as an accountant and accounting shorthand and the assumptions that go with it.
It looks like the shareholders are conserving cash for the company's expected capital outlay to gear up for increasing demand. In the next year that stock divident[sic] will have higher value than the $0.37 it had yesterday.
I took a loose stab at it and now it is your turn to explain.
Feb. 28, 2012 $0.19000 plus .0107 shares of stock
Nov 14, 2011 $0.700000
Aug 15, 2011 $0.620000
May 2, 2011 $0.560000
Feb 11, 2011 $0.580000
Nov 12, 2010 $0.430000
Aug 10, 2010 $0.370000
May 10, 2010 $0.450000
Feb 17, 2010 $0.430000
Nov 3, 2009 $0.180000
Aug 4, 2009 $0.100000
May 11, 2009 $0.045000
Mar 9, 2009 $0.117000
Nov 14, 2008 $0.340000
Aug 18, 2008 $0.570000
May 12, 2008 $0.566670
Feb 8, 2008 $0.466680