10 Stocks Shrinking Shares

Stock buybacks are generally considered a bullish signal on Wall Street. They return capital to shareholders, while declaring management's belief that its own cheap shares are its best return on investment. As long as profits remain consistent, share repurchases can even increase earnings per share, by dividing the same amount of earnings among a smaller pool of shares outstanding.

Today, we'll draw up a list of companies that have announced stock buyback programs, then consult Motley Fool CAPS to see which of those firms the 110,000-strong investor community favors most. If CAPS' top investors endorse the prospects of companies announcing buybacks, Fools should take notice.

Here are some of the latest companies to announce share repurchase programs.

Sources: Company press releases.

Investors at CAPS generally appreciate this group of companies announcing buyback programs; more than half have received ratings of four stars or better. But don't forget, Fools -- a company isn't obligated to repurchase shares just because it has announced its intention to do so.

Buybacks have been partially fueled by the easy credit policies of the past few years. Companies didn't mind borrowing big bucks to repurchase their shares, even if they were trading at all-time highs. With credit policies tight, however, we may see far fewer share repurchase programs in 2008 -- and more companies issuing shares to raise money.

Coming into focus
Just how much impact will a weakened economy have on large-screen TV sales? If you're Corning, not much. By its estimates, it expects a sharp 25% to 30% increase in sales of LCD TVs this year. If you're an investor, however, you take those projections with a grain of salt. Shares in the LCD screen maker fell 4% after it reported earnings in line with expectations last week and guided for flat earnings per share in Q3. Considering that shares have dropped by 25% in just the last month or so alone, management's decision to scoop up its shares at prices it hasn't seen since early last year may be a smart move.

CAPS member Prodders believes that the market's myopia will get corrective lenses soon, and that shares will turn around:

Still exhibiting solid growth, and yet has been beaten right down-major multiple compression. This will reverse as the fear in the market declines and people start to look beyond the current troubles.

A steaming cup of joe
Once upon a time (OK, last year) Sun Microsystems was forced to effect a 1-for-4 reverse split to keep its share price relevant (and its stock listed on the Nasdaq exchange). After a just-released quarterly report showed profits plunging 73% and guidance suggesting further declines in sales for the rest of the year, Sun's future may once again be cloudy.

CAPS member akok appreciates the products Sun produces, but finds the competition it is experiencing from rivals makes them less relevant:

Strong products but terrible business acumen. Sun has abandoned the workstation market years ago to Microsoft's XP and now it's Unix servers are being threatened by commodity hardware (Dell, et al) and software (Linux). It still has a few core capabilities:

1. Java-It still owns Java, but seems unable to parlay its one dominant platform into revenue. Primarily because Java was built from ground up to be hardware agnostic, and in doing so, Sun commoditized the hardware (instead of the software as it had intended).

2. SPARC-it's RISC chipsets cannot keep up with the likes of Intel and IBM microprocessors.

Foolish fallout
You've heard from your fellow investors -- now it's your turn. Start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Sign up for CAPS today and share your best pitch for why your favorite stock will beat or lag the market.