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Skullcandy, Inc. Message Board

  • auagboy auagboy Feb 4, 2013 4:20 PM Flag

    Borrowing money to buy back stock is stupid

    using the line of bank credit to buy back shares is no good. it's like me using my Visa card to buy a car......the inability of the share price to move up suggests trouble is on the horizon and having debt will only make ir worse

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    • Very wrong. A buyback at these prices will be highly accretive. The purchase of Astro Gaming will have paid for itself after just a couple of years. Management is doing well with their available assets, regardless of the stock price.

      There are so many logical fallacies in your post. You do not appear to have a clue about what you are writing. Just because your little mind comes up with some analogy that makes sense to you does not mean that it is true.

      Sentiment: Strong Buy

      • 1 Reply to lesspheus
      • coreylynnh Feb 4, 2013 6:11 PM Flag

        I agree with lesspheus unless the buyback is strictly the management trying to inflate stock for their personal gain. If the company is in great health, however, than it is a move that should pay itself back easily. You borrow money at a low interest rate to buy stock back that appreciates more than the interest paid on the loan. Again, this is all speculating on the true intent of the buyback if there is going to be one. The speculation is that a buyback will occur, but until the buyback does occur then there is no buyback. There may be no intention of a buyback at all but hope news of one may cause a jolt in stock price. Everything now is just speculation.

    • coreylynnh Feb 4, 2013 4:30 PM Flag

      Well it really depends on the reasoning for their desire for a share buyback. Is it the desire for the company to get their stock back cheap and start driving the price back up? Is it to line the pockets of the upper managers? Those are the two most likely, and it really depends on the health of the company. We won't know the health of the company until next earnings.

      • 1 Reply to coreylynnh
      • Those are the two likely reasons. The unfortunate thing here is that Andrus and Alden obviously either need or their perception is the are entitled to selling shares. If I was a big institutional buyer I would question this at the Earnings Call. Dang, Andrus, Andrus and his father, Alden and Alden's LLC and other insiders hold 10,000,000 shares of this company.

        A little fact check is that their holding at the IPO price of 20 bucks is 200,000,000 which is LESS then the current market cap of the stock.

        At some point (hopefully) someone is going to step in and say enough is enough boys and give them a butt chewing for not handling share price drop. All it will take is a big investor to take a stake in the company and slap their hands...

    • in the business world its called leverage, shorts will burn

      Sentiment: Strong Buy

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