Hacker News Reader

> For starters, that's 3 months of at least revenues

Why would they need to hold 3 months of revenue? Why not 3 months of operating expenses and suspend capex?

> more R&D, more equipment, more and better-paid staff, improvement programs, to buy promising technologies, invest in other companies, pay down loans on larger, more modern and more-efficient factories ... the list goes on and on

Does that list include stock buybacks?

View on HN

> Does that list include stock buybacks?

The omission is deliberate.

When money is being returned to shareholders I greatly prefer dividends. It puts pressure on management to manage for sustainable long-term cashflow and removes the temptation to pump up the stock for a quick personal profit. Unfortunately the tax treatment in the US is very unfavourable. By contrast, Australia gives franking credits for dividends and more companies there pay shareholders with dividends instead.

It depends on the prospects of the company and how good investment opportunity are. For a company in a fast-growing market it’s probably better to invest and expand the empire. For a more mature company it’s probably better to return the cash to shareholders so they can invest somewhere else.

Reply on news.ycombinator.com