Thursday, October 23, 2008

Potash continues to waste money on buybacks

Potash, with their earnings release today, still continues to believe that they can gouge farmers with excessively high prices for fertilizer. They've drunk their own kool-aid, as they bought back over 15 million shares of stock at an average price of over 183, and just finished picking up almost 5 million shares in the latest quarter at $175; $100 over the current price of the stock.

Potash will eventually be the poster child of arrogant and out of touch management, who burned through shareholder money in a commodity business, by buying back stock at 10X the price it was just a few years back, throwing money away in stock buybacks, and auction rate securities that have lost 2/3 of their value. And they knowingly did this in a worldwide recession and in a worldwide credit crunch. But then, they had one of Wall Street's "best" advising them!

But then again, they had the cheering of analysts. But they had no cheering here!

Look for estimates to come down.

Here's the press release on today earning's:

During the three months ended September 30, 2008, the company repurchased for cancellation 4,964,500 common shares under the program, at a cost of $870.7 and an average price per share of $175.38. The repurchase resulted in a reduction of share capital of $23.3, and the excess of cost over the average book value of the shares of $847.4 has been recorded as a reduction of retained earnings. During the nine months ended September 30, 2008, a total of 15,820,000 shares were repurchased at a cost of $2,902.9 and an average price per share of $183.50, resulting in a reduction of share capital of $73.8 and a reduction in retained earnings of $2,829.1.

No comments: