When a high-tech business like Tektronix (NYSE:TEK) announces its desire to optimize its capital structure and lower its cost of capital, it may sound more Greek than geek to many of the company's followers. Don't panic, tech heads! We'll step back and see what this move really means.

Tektronix builds electronic testing and monitoring equipment, the stuff that helps companies like Motorola (NYSE:MOT) and Sony (NYSE:SNE) make sure that they ship out properly calibrated, fully functioning gadgets. It specializes in oscilloscopes, spectrum analyzers, and other top-shelf geek equipment. "Whenever you view a Web site, click a mouse, make a cell phone call, or turn on a TV, you touch the work of Tektronix," according to the company's PR materials.

What's up?
The steps Tektronix has taken over the past quarter to upgrade its capital structure include taking on $345 million in new debt and buying back $164 million worth of company stock. Wait a minute -- isn't that particular one-two punch exactly what IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ) did over the summer? Indeed, and their reasons match up nicely with what Tektronix is doing now.

Before taking on the new debt, Tektronix had a squeaky-clean balance sheet, with nary a borrowed penny. Even now, it hardly faces a crushing debt load -- interest payments for the quarter totaled only $1.4 million, which makes for an EBIT-to-interest ratio of about 20.

That's comparable to the interest service ratios at IBM (where EBIT is 40 times interest), Cisco Systems (NASDAQ:CSCO) with 23 times interest, or serial acquirer Oracle (NASDAQ:ORCL) at 18. It's just done on a smaller scale, in the lower-mid-cap hood where Tektronix hangs.

Yes, but why bother?
The new capital structure has reached a degree of leverage comparable to some respectable, mature tech companies. Sometimes, a certain degree of debt can benefit a company by lowering its weighted average cost of capital, thanks to tax advantages associated with the deductibility of interest payments.   

The board just upped its authorized share repurchase limits by another $350 million, and management expects to spend something like $140 million of that by the end of the fiscal year. That's three more quarters from now, and I wouldn't be surprised to see that estimate raised before all is said and done. After all, the company bought back roughly 7% of its outstanding shares in just one quarter, and that was at a significantly fatter price tag per share than what we're looking at today. If Tektronix  believes the company is undervalued, it makes sense for management to maintain an active repurchase program like IBM and HP.

Foolish takeaway
I hope that makes sense to my fellow gearheads. It never hurts to understand financial theories a bit better, even if all you ever invest in are high-flying high-tech operations. Taking on debt just to buy back stock may look like fiscal insanity, but there are time-honored reasons for this practice. Tektronix is simply acting like a grown-up business and emulating some excellent role models.

Further financial Foolishness:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will make your day, every day.