Categories: OLD Media Moves

By wary of portraying stock buybacks as confident move

TheStreet.com media critic Marek Fuchs looks at a New York Times story on Lehman Brothers and how it portrayed a recent stock repurchase plan and cautions business journalists from implying that such moves convey that the executives are bullish about future prospects.

Fuchs writes, “Even when the buyback goes beyond a gesture designed to impress investors and the business media, it might have no long-term meaning. Troubled, reeling companies (like Lehman) might merely be trying to support the stock a bit in the short run, to buy company officials some time for various (but obvious) reasons.

“Don’t forget too that a lot of companies — especially on Wall Street — pay as much in company stock as they do in salary. That gives even more incentive to buy back stock, as company officials have to keep that most important constituency (the employees) in the fold.

“Prop up the stock a bit or, at least, give them the false show of confidence and you buy more time. In these cases, too, the company is giving out a lot of stock to employees and issuing stock for other reasons, so they are often looking to keep the float the same. Which, again, is different from true confidence.”