Boston, MA 11/04/2013 (wallstreetpr) – One of the largest suppliers of enterprise wide storage solutions in the world, EMC Corporation (NYSE:EMC) has made it clear that it will continue with its long term stated objective of returning a substantial amount of free cash to its shareholders. This is inspite od the fact that in recent quarterly results, company disappointed the markets with numbers below expectations because of reduced federal spending. Company management has also trimmed down the targets for a complete year.
In what has been stated by company on several occasions, this buyback is a past of its goal for 2015. Company intends to return $6 billion to its shareholders during the period January 2013 to December 2015. And it seems that company is going to overachieve its targets as company has already bought back shares worth more than $2.5 billion. This leaves the company with $3.5 billion more to use for buy backs over the next 24 months.
In a hypothetical situation, if the company was to buy back shares worth remains $3.5 billion at current market price, it would have extinguished approximately 145 million outstanding shares. This translates into a reduction in total outstanding shares by almost 7%. And this would have significant impact on company’s EPS and may turn out to be good for long term investors. And with prices of the shares coming down from a high of $27 to lows of $23, it seems like an opportune time to accumulate the stock and take the benefit of potential increase in future earnings per share due to buybacks. Even company’s management believes that Total sales are going to rise at rate of almost 9% per annum and earnings would follow a better trend with a 10% growth rate till late 2016. Add to it the fact that company is also taking the dividend route to award its shareholders, this seems like a screaming buy at current valuations.
