Stocks rally 4.5% as investors approve of move
Viacom said Thursday that it plans to repurchase up to $3 billion of its own common shares, indicating it is leaning away from making significant acquisitions at this time.The media giant, whose holdings include CBS, MTV and Nickelodeon, said the buyback will begin after the expiration of a current $2 billion initiative, begun in February of 2001. Viacom has already repurchased $1.8 billion worth of stock under that plan. Viacom will fund the latest buyback with cash from operations. Investors applauded the move Thursday: Viacom shares rallied 4.5% on heavy trading to end the day at $39.04. The company is still getting a bargain on the buyback, however, as the shares have tumbled 25% from highs near $52 last spring. At the Goldman Sachs Communacopia confab last week, topper Mel Karmazin said Viacom’s main uses for cash would be for strategic investments or stock repurchasing. Exec noted at the time that Viacom had already spent 14% more on buybacks than it had in past years. Viacom has about 1.8 billion shares outstanding.