This repurchase plan is on top of another 300 million-share repurchase scheme initiated in 2010. AT&T has repurchased 143.5 million shares at a cost of $4.6 billion through the end of June 2012.
AT&T chairman and CEO Randall Stephenson said in a statement that "This action allows us to continue returning cash to our shareholders through dividends and buybacks while maintaining a strong balance sheet and investing in the future of our business."
AT&T shareholders are probably feeling pretty good about their investment in the carrier. So far this year, AT&T stock has gone up 23%, and the company pumps out a steady quarterly dividend that yields 4.7% at current share price. But there are two things about this announcement that make me, as an AT&T stockholder, a bit uneasy.
First, there is the company's dwindling supply of cash on hand. Since the beginning of the year, cash and equivalents dropped from $3.19 billion to $2.15 billion. For a capital expenditure-heavy industry such as wireless telecom, is the buying back of shares at a relatively high multiple -- a P/E of almost 50 -- as wise as using that cash to expand its LTE network? As it now stands, Verizon
My second cause of concern is even more troubling. Was this buyback program initiated mainly to raise the stock price above a certain executive-compensation threshold? As chairman of AT&T's board of directors, Randall Stephenson has influence that could tip the scales of any compensation decisions regarding his pay as CEO.
Could this be one way to recover part, or all, of that $5 million he lost in his 2011 pay because of the failed AT&T/T-Mobile USA merger? That setback moved Stephenson into fourth place in the 2011 wireless industry executive-compensation race. His total compensation of $22 million fell just behind Verizon CEO Lowell McAdam, at $23.12 million, and second-place Motorola Solutions CEO Greg Brown, who pulled in $29.33 million. In first place, and in a position that would take more than some stock buyback plan to usurp, is Apple's
I hope the stock repurchase-plan is done for the right reasons, but the cynic in me is always wondering.
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