March 27, 2013 12:33 am
I listened... Here's what I heard...
They reorganized their debt so that they only have to pay back interest for 3 years. Let's assume that is 5% on 25 million = 1.25 million/yr.
They are not going to increase the dividend unless there is another good quarter. Okay so .08 x 60 million = 4.8 million/yr.
Let's round off... 6 million/yr. Think about it... they are committed to 6 million/yr of which 4.8 million are dividends.
Okay so they do 30 million in cash flow. Wait... lets make it 25 million...why get too presumptious. Hmmm... 25 minus 6 equals 19 right? So at 25 million in cash flow they can buy back 6 million shares at 3.17. Do that for 2 years... now there is 50 million shares still with 25 million cash flow... Last I checked 50 million shares with a dividend of .20 is only 10 million/yr. Still 15 million left over.
So... why increase the dividend? Why not just buy back shares and grow the Company. If I had 10% = 6 million shares (I wish), in two years I would own 12% of the Company and 12% of the dividends. Robotti must be laughing all the way to the bank.
Someone correct my math.