Co. to repurchase up to $3 bil of its own stock
Moving to stem the slide of its disintegrating stock price, the Yahoo! board of directors last week approved a $3 billion stock buyback.
Move gives the company the authority to buy back up to $3 billion of its own stock on the open market or in private transactions during the next five years from time to time, depending on market conditions, stock price and other factors. Buyback program can be terminated or suspended at any time.
Yahoo! stock had fallen nearly 18% this year but perked up Thursday on the stock repurchase news, climbing 1.75% to $31.41.
The stock purchases will come out of Yahoo!’s working capital. At the end of last year, the company had approximately $4.6 billion in cash or assets that could quickly be sold for cash on hand.
A stock repurchase program cuts down on the number of shares outstanding in a company, making each share theoretically more valuable.
Stock repurchase program is Yahoo!’s second. The board previously authorized a $500 million stock repurchase program in March 2001. Under that program, Yahoo! repurchased $325 million in stock, including $165 million in the first quarter of this year. Company has another $175 million in purchases pending under the old program.