(NYSE: EMC) that it would purchase shares of VMware in a stock purchase program “to allow the company to make open market purchases of VMware Class A common stock in order to maintain EMC’s approximately 80% majority ownership at its current level over the long term” and “… underscores VMware’s role in EMC’s strategic direction.” More importantly said was, “We believe maintaining EMC’s ownership level in VMware at approximately 80% allows us to continue to achieve the above objectives while also maximizing value for EMC shareholders over the long term.” And also yesterday came a release from EMC Corp. VMware is its own public entity, but EMC owns a super-majority stake in the company. Like it or not, they effectively had to conduct share buybacks to keep employee stock options from constantly adding to the float.īut based upon a recent deal announced where VMware acquired certain EMC operations, all of this seemed to be a prelude to great break-up of the EMC ownership of VMware. This is what Cisco Systems and Dell have been known for. But many tech companies have to repurchase shares of common stock in the open market to absorb the shareholder dilution that comes from all those employee stock options as they get exercised. Effectively, this drives up earnings per share from operations. Usually buybacks are meant to take off excessive shares or to reduce the public float of a common stock. These purchases can be in the open market or through private transactions subject to market conditions. VMware’s board of directors authorized the purchase of up to $400 million of its Class A common stock through the end of 2011 in transactions from time to time. (NYSE: EMC) relationship and spin-off, but it is also reminiscent of the Cisco Systems Inc. This will potentially have a tie to the EMC Corp. (NYSE: VMW) that it was repurchasing up to $400 million in common stock through 2011. And last night came the announcement from VMware, Inc. In fact, many argue whether or not stock buyback plans do anything at all except waste cash. Stock buybacks are now becoming to be “Oh so 2007” for investors. 2010 is shaping up to be the year of the dividend.
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