On Friday, wood products company Weyerhaeuser (NYSE:WY) dropped a couple of bombshells on the market. First, its profits for the third quarter of 2005 came in even weaker than analysts had predicted. The Street, which offers predictions not of Weyerhaeuser's net earnings but of its "adjusted" earnings, was looking for the company to report $0.98 worth of the latter. As it turned out, the best Weyerhaeuser could manage was $0.93. If you're confused by those numbers, if you heard that Weyerhaeuser earned $1.16, never fear -- that number, too, is correct.

To translate the $0.93 number from "analyst math" into real-world math:

  1. Add the company's one-time gain of $0.31 for sale of its interest in a joint venture,
  2. Add another $0.06 for an income tax benefit,
  3. Subtract $0.08 for a restructuring charge,
  4. And take out another $0.06 for costs related to an early debt repayment.

Total: $1.16, or the correct number under generally accepted accounting principles.

So the earnings miss was bombshell No. 1. Bombshell No. 2 was the company's announcement that it intends to repurchase as much as 7.4% of its shares outstanding -- 18 million in all. One suspects that it was this announcement, rather than the earnings miss, that accounts for the stock rising a hair on Friday, rather than imitating a felled oak.

But while the Street seemed enamored of Weyerhaeuser's buyback plan, this Fool isn't so sure. Right now, Weyerhaeuser carries less than $900 million in cash on its balance sheet, against nearly $9 billion in long-term debt. To acquire its full authorized amount of 18 million shares at anything near their $62 price per stub will cost the company another $1.1 billion.

Mind you, many other companies in this industry carry heavy debt loads. Georgia Pacific (NYSE:GP), for example, has $200 million in cash against $8.5 billion in debt. International Paper (NYSE:IP) has $1.2 billion in cash against $13.4 billion in debt. Motley Fool Hidden Gems recommendation Neenah Paper (NYSE:NP), an indirect competitor to Weyerhauser, has a somewhat milder balance sheet, with $38 million in cash against $230 million in debt.

Weyerhaeuser, however, justified its action by pointing to its "significant cash flows." But a glance at the bottom of the company's earnings release reveals that those cash flows aren't as strong as they used to be. By this time last year, Weyerhaeuser had generated $1 billion in free cash flow. Last week, the company acknowledged that the first three quarters of 2005 saw it generate just $400 million. To this Fool's ears, Weyerhaeuser's justification sounds hollow.

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Fool contributor Rich Smith owns no shares in any company mentioned here.