Don't Believe What You Read About Buybacks

A similar hunk from today's Wall Street Journal:

UBS will put the proceeds toward buying back shares within a previously announced program worth up to eight billion Swiss francs, the bank said.

More, also from today's WSJ, doing a poor job explaining one of Thursday's biggest stock market gainers:

Toro rose 3.53, or 6.5%, to 57.95, in the top five among New York Stock Exchange percentage gainers. The lawnmower and snow-blower maker reported fiscal second-quarter net income rose 7%, and said its board authorized the buyback of as many as three million shares.

Was the excitement warranted? Only the Shadow knows.

The irony, of course, is that the information is available at reporters' fingertips, and some -- even those who also report share buybacks with such imbecilic incompleteness -- know how to do it the right way. Just look at the last paragraph on this recent article about Merrill Lynch(MER) by Reuters, which messed up the Intuit story.

	Can you name a company that recently announced a share buyback that is big in relation to its total shares outstanding? Answer Here

This time, in good service to investors, Reuters wrote:

Based on Friday's close of $90.11, the most recent $6 billion authorization could buy back about 66.6 million shares, or nearly 8 percent of the average basic number of shares listed in its most recent quarterly results.

Impressive, huh? The reporter provided one number in relation to another, giving it actual meaning.

Of course, there was another reason The Business Press Maven was honking and snorting when he made his fictitious announcement of a share buyback. Can you divine it?

I'll give you a quick hint. Heck, I'll just tell you outright. Although stocks often run on buyout announcements, how often do you see consistent follow-up on how much of the announced buyback was ever completed? Especially with those crafty words they use like, "we'll buy up to" or "as much as." Those verbal formulations often turn out to mean much less.

>To order reprints of this article, click here: Reprints