>investors were evidently happy with management's
>decision to reinvest the earnings. How else can we explain DEC's $15
>billion market value in 1989?
See: *they* dont' even know how to "value" a company :-)
>The inevitable deceleration of rapid growth is illustrated by the
>history of IBM, the most famous growth stock of the period after
>World War 11.
Crikey! I missed World Wars 3-10!
>IBM has paid dividends since the 1930s, but most IBM
>stockholders bought the stock for growth, not dividends. Throughout
>the 1950s and 1960s the dividend yield (dividend per share as a
>percent of stock price) was very low-usually between I and 2
>percent. Sales, earnings, and dividends grew at compound annual
>rates of roughly 20 percent.
>
>That kind of growth cannot continue forever. By the mid- 1970s IBM
>lacked investment opportunities attractive enough to justify
>continued growth at that rate. Yet its existing businesses remained
>healthy and profitable. Consequently, the firm accumulated cash at
>an embarrassing rate. It had $6.1 billion in cash and marketable
>securities at the end of 1976 and $5.4 billion at year-end 1977. it
>was therefore not surprising to find IBM paying more and more
>generous dividends: In 1978 it paid $2.88 per share on earnings per
>share of $5.32, a 54 percent payout ratio. Also, IBM spent about
>$1.4 billion in 1977 and 1978 to repurchase its own shares. That is,
>IBM distributed cash to its shareholders by buying shares from them.
>As Chapter 16 explains, this is essentially equivalent to paying a
>cash dividend.
>
>IBM's high-payout policy continued in the 1980s. From 1986 through
>1989 it paid out 56 percent of earnings and repurchased 47 million
>shares for $5.66 billion.
This is all rubbish; IBM is now 4x higher than it was when this was written, and it's dividend is down to $0.50 on $4.22 of earnings. Yahoo says that's a 0.41% yield ...
Face it: these guys are just making this crap up.
/jordan