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SciClone Pharmaceuticals, Inc. Message Board

  • ustc823 ustc823 Apr 1, 2013 5:25 PM Flag

    2013 non-GAAP EPS will be 66 cents

    Buying-back doesn't move the stock price. Why not issue 30 cents dividend to shareholders. then stock price may move to $6-7 level since people may like 4-5% dividend return (most big Pharma give you 4-5% dividend return).
    I feel the current CEO is very stupid to run this company.
    Oh well

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    • I agree with all you say. A fixed dividend would immediately boost the stock price and give it support. Dividends would go to people who actually PAID for the SCLN stock. But buy backs are much better for management. Option holders, like Blobel and the board members, would not get dividends. They prefer buybacks because the reduction in shares outstanding eventually makes their options more valuable.

      Here's how it works in a no-growth, cash generating situation like SciClone. By paying out a $.30 dividend to stockholders, at a 5% dividend yield (pretty attractive in these low interest rate times) the share price would go to $6.00. Because there's little or no growth at SciClone, the stock price would pretty much stay at $6.00, assuming no change in dividend yield, but stockholders would be receiving the dependable $.30 dividend. Today's stockholders (at $4.50 per share) would be getting a 6.7% yield for the foreseeable future and new investors could lock in the 5% yield. But for Blobel and the next fall-guy he gets for CFO wouldn't benefit from that other than the initial boost in value of their current options. Going forward, options issued at the fair market price of $6.00 will have little value since the stock price, without real corporate growth, won't increase. Bummer for them that performance is required to increase the value of their options. In comparison, stock buybacks slowly over time begin to have some effect on improving eps, meanwhile more options are issued to management and the board at perhaps slowly increasing exercise prices. And, of course, by keeping most of the cash still at hand for another brilliant acquisition like NovaMed it creates the possibility of another great event that requires great bonuses to be distributed. This board and Blobel have proven themselves untrustworthy of making decisions in the interests of the stockholders.

 
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