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Message: Buy back or divs?

Buy back or divs?

posted on Mar 30, 2010 03:11PM

These topics come up often here, as they did at the last 2 SHM's, and for that matter, a reverse split.

Management has repeatedly stated, "we are keeping all options open."

IMO, I fail to see how declaring divs would raise the pps. If someone had lets say 1 mln shares, and the div was .025 per share, that's $25,000. I don't know about the rest of you, but my divs are automatically reinvested in shares, as that is the selection I have made with my Fidelity accounts, all 3 of them.

$25,000 at 13 cents = 192,308 shares.

There are 287 mln shares outstanding, so at .025 per share = 7.175 mln shares...more dilution. Sure helped PTSC in 2007 huh?

As for a buy back, at 13 cents, 10 mln shares would cost them 1.3 mln, or nearly 1/2 of what's in the bank, at the present time. Does anyone think buying back 10 mln shares would effect the pps? I say no....

Granted, if the BOD knew a secret that would propel the pps to a buck in 12 months, 13 cents would be a great investment when selling them back...that's a given.

From where I sit, it is far too soon for either option to be exercised. If/when the day comes that EDIG has 25, 50, 100 mln in the bank, now that would be a good time to do one or the other, but I'd prefer a buy back, as the market interprets such a move as a positive for the company.

JMO as always...

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