Bill Gates sold a million shares. What's that mean? Not much, considering he has over a billion shares.
It's pocket change to him. But we are seeing an awful lot of stock buy backs, despite
poor guidance.

Every day we see more and more companies buying stock. Now in "normal times," a company buys back its own stock when it's clear
to them that it's a better investment, rather than putting money in
something else. So, what could be wrong with that? Nothing, in fact
it's the way it should be. But, is that why we are seeing all these buy
backs lately? Are all these companies that are giving such lousy guidance
buying in their own stock because even though their company doing poorly,
it's better than anything else they could be doing?

We think not. We think that they are playing a double edged sword here. See,
buying back stock removes inventory from the market. The less shares in
the "float" with the same amount of shareholders, means the stock price
should rise a bit, or at least not fall as fast. Could some of these buy
backs be desperation moves to keep people interested in holding their
stock? Bet on it. But, in some cases the reason is even more sinister. See,
a lot of stock options have to get satisfied with actual stock. So, if you
have someone who wishes to exercise some options, "bringing in" some
shares appears to kill two birds with one stone. But it's a deception. You
aren't going to hear them admit they brought those shares into cover
options, you will hear it's for the good of the company shareholders!

In any event, we are seeing buyback after buyback in tech land, and we just
want to let you know that although it often helps the stock in the short
term, what's going on behind the scenes is much more important. At some
point, expensing for options will show the real costs associated with all
those pretty looking buy backs, and then earnings that are already not so
very hot, will in some cases, be non-existent. Just keep that in mind
as you see these companies announce all these buybacks.

http://clix.to/wallmann