Greenberg: Why ADT Is Appalling

This story has been updated from 1:09 PM EST with ADT's response to my media inquiry.

NEW YORK (TheStreet) -- Earnings disappointments come a dime-a-dozen, but ADT's (ADT) is a standout.

The company said its customer growth in its fiscal first quarter, ended Dec. 27, didn't meet its expectations and that it has "implemented actions, including improvements in our dealer channel and lead generation process, to regain subscriber traction in the future."

Here's the problem: Over the past year, rather than investing more cash in its business than it otherwise might have, ADT has spent billions buying back shares at prices well above where the stock now trades -- with the distortion even greater in the wake of today's earnings miss.

That highlights a problem with buybacks, in general: They're often designed to give a short-term pop in the stock to assuage antsy investors. They're also often the tool of first resort when activists land on a company's doorstep, which was the case with ADT.

And, as is the case with ADT, the result can often be short-term gain for long-term pain.

A little history here: In early October 2012 ADT was spun off from Tyco (TYC). Later that month Keith Meister of the hedge fund, Corvex Management, filed that his fund held a 5% stake in ADT. At the same time he gave a presentation saying he thought the stock was valued at $61 and he urged the company to raise debt and buy back its shares.

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