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  • trumpace trumpace Oct 22, 2013 8:52 AM Flag

    Lets Talk Buy Backs

    I think it is time to talk about stock buy backs. As I have mentioned and some disagreed with me on (and that is ok) insider purchases, there is a more important action being share buy backs programs. This is very different than insiders buying share. Now if a company only buys shares back to offset the incentive option's issued to management, this activity does not help the rest of the share holders. A true share repurchasing program can help the earnings as there are less shares to consider in the calculation. If management would have been pro active in share repurchases during Q2 they could have at the least been closer to the street number. IMHO KS and team needs to consider revamping the repurchase program so it has a positive impact on share holder value. Again I am not interested in insiders buying more shares as that can have a negative effect on control of a company in my experience over the years. Management has enough shares themselves. What I would rather see is management promote a share repurchase program of some strength, in other words a significant amount like 10% of float or better over the next two years, to start with. Bottom line is we do not need the share count to rise as that isn't good for the earnings appearance. We need to see less shares in the count and a share repurchase program can do the trick. Not to mention less shares available can bring the pps up to fair value for the company. Management by having a strong share repurchase program at this time when the pps is low will send a message to Wallstreet and investors that the company is stronger. When a company has the numbers that will show strength it makes sense then to have a share repurchase program. It does not make sense to have a share repurchase program when the share price is too high as in the past. The time for a strong share repurchase program is now. This action I would like to see announced in Q3 or Q4. ALL IMHO.

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    • Mr. Trumpace, with all due respect , as I believe you are an astute investor who understands the game, I could not disagree more with any buy back activity above book value. The buyback of 5 million shares or 10% of the float would use most if not all of the cash on hand. The balance sheet is if not healthy at least stable at the current level. What has to happen in my opinion, is that the company has to start delivering on some key strategic issues that will drive the top line. This is the best effort and best possible return on investment in my opinion. Keith has done an excellent job on the cost side of the business and made some key decisions about improved guides for growth such as lowering the ASP and building new customer growth while making reasonable improvement in retention and acquisition of new customer growth. The plan was and remains a key factor in the eventual grow out of this business into an enterprise that is worth something more than the current price. Good efforts have been made in marketing with respect to name change while the new brand is a little foggy. They do not pay NBC anymore and they certainly have made good effort on distribution costs. Keith has also assembled a decent team but it can be argued the strength of the QVC background also is part of the weakness in developing a footprint that does not look like" QVC Lite ". This is not easy as it took HSN a number of years to build a unique Brand that allows them to claim some first positions in mind awareness. Q is still the Queen of this space but HSN has really developed their own space and personality. In my opinion this is the work left on the table and it sits squarely on marketing and merchandising not on stock buy backs. They are building inter net and mobile but the over all penetration is so low that it is ridculous. We are all sitting here hoping for a mid to high single digit sales increase ( It would be nice !) . What we really need is a sales explosion strategy that works.

      • 1 Reply to retailexecutive
      • My plan covers a two year period retail and only used if the price is right. Keep in mind the management knows best when buying their stock is a great investment because the fundamentals are strong and then again they know when to hold down the purchasing. The edge is by buying shares you can control the shorts pushing the price down on small trades, thus the company by a buy back program can put a floor in.

        Your points are understood and I agree with what management has done thus far. However I have seen all to much buy backs come at the wrong time and all I am saying is a two year or even three year program that would outline that when management thinks the pps is to low they would buy back stock at times of opportunity, would send a huge message to the folks that are swinging the pps on low volume and we may see the swings stop and a fair value to the company come into play. But it is ok if we disagree on this one as mar is in agreement with you and I am the odd one out. I do think it would be a very positive move on managements part and would enhance share holder value.

    • NO. An EMPHATIC NO. Prior regimes wasted $100M+ on BB. We do not have $ to waste on BB. Every effort should focus on growing Top and Bottom line. Period. End of Story.

      Insider buying is always welcomed however because it is their money!

      • 1 Reply to marubozo100
      • mar, the prior regimes did their buy backs at an inflated price per share which is not what we see today..., I would argue the timing is better today then when the price is $60. As for insiders buying shares in my over 35 years of experience, it has never ended well when management controls the bulk of the company. I have seen management vote their control to purchase and take the company private, because of the amount of voting shares they hold. No court will ever IMHO overturn voters taking a company private and that is what control can do if management has too high of a share count. Not to mention, if the insiders hold control through share count high percentage, they can sweeten their pay and bonuses better and the rest of the share holders just have to go along. Also it is much harder to get a change in management if things go south, or a change in the BOD as they hold more of the voting power. I have been through this and it never works as the company share price goes down but management continues to be over paid. Since management got into most of the shares at pennies on the dollars through stock option incentives, they will not lose as regular share holders like us (I assume you are not VVTV management) will.

        Now mar, if you truly believe VVTV will be much higher next year why wouldn't you want that return in a buy back program? A buy back program that buys cheap stock adds value to the company and share holders, if done at the right time...., this is the right time. I agree with you prior management bought shares at the high, but that is not the case I presented here. Also insiders spending their own money of shares is a stretch since unless they buy on the open market, they get a discount we do not get and any discount costs the other share holders money as the company buys the shares to issue the shares. However, management buying shares along with a buyback program on the open market, although I would not like it, I could see it. See part two.