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InterDigital, Inc. Message Board

  • jonluxy jonluxy Jul 8, 2010 2:04 PM Flag

    Most Stock Buybacks haven't Worked

    The other evening Cramer was railing against stock buybacks versus dividends. Most stocks that were engaged in buybacks in the last three years have not provided the intended value to their shareholders, buying at higher values only to have the share prices drop to bargain basement levels, like IDCC, even though there was EPS growth. People are selling because they are skittish on the economy, and in order to raise cash for their day to day in absence of work. So I agree with Cramer here - (I was disappointed that they bought at high prices in the upper 20's and 30s and then reduced their buying when the stock droped into the upper teens. It didn't make sense ), cut the buy back program and if you want to use that cash to provide value to shareholders, use that cash to fund a dividend program. Comments?

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    • I couldn't agree more. Management's refusal to repurchase shares while the stock was in the teens will always remain a mystery to me (and also to Heartland apparently, judging from the remarks of their representative at the conference call several quarters ago).

      I understand why they don't want to pay a dividend. That would increase the price per share, leave less money under management's control, and be a further impediment to taking the company private (if they could ever suck up their guts and actually do it).

      Vacillating on whether to take the company private, in fact, is the only thing which could logically explain management's conduct in sitting on so much cash without declaring a dividend or repurchasing shares. If they are thinking about taking the company private, that would explain doing so little to raise the stock price. After another year or so of no appreciation, stockholders would jump at a chance to get out of the stock at $30!

      And, by then, they could finance the purchase almost entirely with our money. They've already got $14 per share in hand.

      • 1 Reply to bustedbox2
      • It seems that most companies do a very poor job of buying back company shares. Buying at the wrong time and then being scared and not buying when others are fearful.

        It is the rare exception of a CEO who is good at share buying. Look at Buffet, who prefers to buy shares in other companies for Berkshire.

        I say, definitely they should start a quarterly dividend. Say, at least 2% of annual net income. This would get the attention of those who like to invest in dividend-paying stocks and would highlight the undervalued nature of IDCC shareprice.

        Obviously, the CEO and board care little about IDCC share price. Otherwise they wouldn't be hoarding half a billion dollars and earning less than 1% on that money.

        The reason I like the stock is that it is so undervalued that there's a good chance of a catalyst that will send the shares closer to fair value.

    • has anyone compared the number of shares "bought back" with the number of options exercised by insiders?

    • I'm here but have gotten frustrated with the 'talk" at the ASM...Asked about a divd?"we have been talking about it"Sitting on over 500M.."looking for acquisitions"..And Nokia drags on..yet..THEY can settle at any time??

      Our main concern is to create shareholder we are at the same price we were five years ago YET we are in the midst of a mobile device revolution that we holsd over 7000 patents for!!We are run by lawyers and employ the best to to ensure our patents are paid for YET we are like a "paper tiger"!!...Yrs frustrated!!

      BTW..our EPS for this qtr should be good!

    • I think the SOLE reason they were using buybacks was to offset the dilution caused from mgt's selling of vested options.Mgt used corporate money in essence to buyback THEIR shares!

      This is why the price never really rose and why they paid high prices!pigs at the trougth.

      • 1 Reply to hannibal7878
      • Just like politicians, and managers everywhere. If you let them feed from the trough they will. Most common shareholders never bother to vote on proxies and managers get whatever they want. Likewise common citizens are not represented in Washington to the dgree deep pocketed Corporations/ Industries are. It seems only deep pocketed politicians get elected, and deep pocketed lobbyists get represented by them. We common shareholders and citizens just have to hope that on occasion their interests will overlap with ours, like maybe if managers flatter and pepper themselves with enough gifts of stock, they might eventually do something that a shareholder would benefit from (being that they themselves will be shareholders and realize that a higher shareprice would benefit them too, that is if they realize they are shareholders and know what stock is and that sharprice has meaning).

69.82+0.15(+0.22%)Aug 26 4:00 PMEDT