Splits just create paperwork. These labor and material costs could better serve the investor via a dividend. IMHO, higher stock prices also keep out the nickel and dimers (e.g. day traders). A stock price of $1000/share would be fine with me.
Indicates that, after investigating all potential investments ... the best one available is CVX stock. (At current oil, natural gas and refinery margins ..... CVX is generating a lot of cash flow.)
The management is stating that CVX is "undervalued".
A repurchase of $5 billion in shares would be a bit over 5% of outstanding shares (at current stock price).
Each share (post repurchase) would give us a 5+% bigger piece of the pie, assuming the size of the pie were constant (by that I mean our current market capitalization of $94 Billion).... the repurchase of the total of $5 Billion in shares should ultimately be worth around $5 per share to shareholders.
It's a good thing.
I applaud the BOD for the buyback as it will raise share value.
I do believe, however, the key point here is the lack of E&P opportunities in which the company could invest the money (or at least a large portion of it) at a greater return. It does look like CVX will have to be a company that will buy/"merge" others to gain additional large reserves. I think it may be time to look at these targets and invest in them as well as CVX.
CVX Stock is bought back, outstanding shares decrease along with cash dividend obligation, and stock price rises.
Then CVX stock is split 2 for 1 doubling outstanding shares. No change in the total cash dividend obligation because in a 2 for 1 split, the dividend per share is halved.
Net effect = lower cash dividend obligation.
I agree with your totally. Looks to me the Company is going to get the price of the stock up over $100 a share with or without investor money flowing in. I also think that the reason for the move is that sometime this year we will see a 2/1 stock spilt due to the actions of the stock buyback. The Company now is over the merger and is running like a "Runaway Train" making lots of cash and rolling over it's competition one oil well at a time. The 3-year time period for the buyback is also a sign to me that within that time there will be another takeover or merger. Man it is great to be a CVX stockholder!
Common Stock Repurchase Program
SAN RAMON, Calif., March 31 -- ChevronTexaco Corp. announced today that its board of directors approved a new program to repurchase up to $5 billion of the company's common stock. The repurchases will occur over a period of up to three years beginning April 1, 2004, as a means of further enhancing stockholder value.
"We've had a sustained period of strong cash flows from our company operations. As a result, we've been able to significantly reduce our debt levels and make voluntary funding contributions to our major employee pension plans," said ChevronTexaco Chairman and CEO Dave O'Reilly. "As we initiate this program to repurchase shares and return cash to our stockholders, we remain committed to the principles of capital stewardship and the maintenance of a strong balance sheet and a high rating of our debt securities by the major credit-rating agencies."
Acquisitions for the share repurchase program will be made from time to time at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. The program may be discontinued at any time.
Cautionary Statement Relevant to Forward-Looking Information for the Purpose of "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995.
This news release contains forward-looking statements about ChevronTexaco's common stock repurchase program. The statements are based on management's current expectations, estimates and projections; are not guarantees of future performance; and are subject to certain risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Among the factors that could cause actual results to differ materially are changes in the prices of and demand for crude oil, natural gas and refined products; actions of competitors; technological developments; potential disruption or interruption of the company's production or manufacturing facilities due to war, accidents, political events, civil unrest or severe weather; potential delays in the development, construction or start-up of planned products; inability or failure of the company's joint venture partners to fund their share of operations and development activities; local political events and general economic conditions. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, ChevronTexaco undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE ChevronTexaco Corp.