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Comment by pilom | Hacker News Reader

I don't think you have it right. The buy-back doesn't make each share owned by the public worth more of Apple. What it does is makes the company own more of its own shares (i.e. more shares are owned privately instead of publicly). The easy way to understand it is to take it to the extreme. If Apple bought every share but one, that one shareholder would not own 100% of the company. If Apple bought every share that would be taking the company private.

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When a company is taken private, what happens is that one group of shareholders buys all the rest of the shares, and removes the company's shares from public trading. This is what Michael Dell and his group are currently trying to do.

I doubt a company could take itself private. Who would own it? Would it own itself?

MaysonL's explanation in the grandfather comment to this one is right. You do have to take into account that the 85% that will now be the new 100% will have less capital on hand, though.

If the stock market price is efficient, the new apple should only have a market cap of 85% of the old one. If it's more (or less), the stockmarket is not really rational..

http://en.wikipedia.org/wiki/Privatization

Different thing: "The first is the buying of all outstanding shares of a publicly traded company by a single entity, taking the company private." That single entity can't be the company itself.

Companies can take themselves private. BestBuy is in the process of doing it right now.

The owners? The stockholders. They just aren't trading their shares on NASDAQ anymore.

MaysonL's explanation is incorrect.

You're all talking past each other. "Taking a company private" has nothing to do with stock buybacks. Stock buybacks are when the company itself buys its own stock and then cancels the shares, which increases the percentage ownership stake of the remaining stockholders. Taking a company private means that a single large investor (or a cooperating group thereof) buys 100% of the shares and then votes to delist the company from the stock exchange and stop trading the shares publicly.

Yes. So a company can't take _itself_ private. Stockholders can take a company private.

Dell is currently also in the process of taking itself private in what could be the largest of it's kind, and a precursor to what we could see coming ahead. Read this article for more about it: http://venturebeat.com/2013/02/05/dell-privatization-marks-a...

Nope you're incorrect. The shares are repurchased and cancelled which increases the stake of the remaining shareholders in the company.

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