Kodak - What will $1 Billion buy back of stock mean for company's future?

Question

Short term and Long term?

Thanks.

http://biz.yahoo.com/bw/080624/20080624005803.html?.v=1

Answer 1

could mean a rise in price per share for stockholders.

Answer 2

For the company:  The company is shelling out $1 billion over the next 18 months to buy back stock.  That is $1 billion that cannot be used to make money.  For companies, buying back stock doesn't usually help them out.  It is done to make the owners (shareholders) happy.

For the shareholders:  With the increased buying going on due to this program, there will be more upward price pressure than there would have been without it.  As it completes, it means that the earnings of the company will be divided amongst fewer shares, resulting in a higher earnings per share number.  It will also mean that a dividend of the same total dollar amount will have to be shared with 25% fewer shares, so each share will have more of the dividend, assuming it stays the same, dollar-wise.