In the U.S. stock buybacks are nothing more than a tax dodge. Period.
From the big brains at Electronic Engineering Times, December 7:
The U.S. Senate has approved $52 billion for the CHIPS for America Act, aimed at reviving the American semiconductor industry over the next decade. While the Act awaits approval in the House of Representatives, we should examine whether it is the most effective way to encourage investment in domestic manufacturing.
One of the key goals of the CHIPS Act is to encourage renewed investment in manufacturing. But the conditions that have caused the U.S. to fall behind are not addressed by the Act. The US incentive structure is skewed because there’s a stronger impetus for executives to choose stock buybacks over reinvesting in operations.
Several U.S. tech companies now lobbying for the CHIPS Act have squandered past support from the U.S. government while instead showing more appetite for share buybacks to boost company stock prices. Among the Semiconductor Industry Association (SIA) corporate signatories of a recent letter to President Biden, Intel, IBM, Qualcomm, Texas Instruments, and Broadcom did a combined $249 billion in buybacks over the decade 2011-2020, according to William Lazonick, Professor of Economics Emeritus at the University of Massachusetts.
Intel lags behind TSMC and Samsung in process technology in part because of a swing toward buybacks, according to Lazonick. While Intel spent $50 billion on capital expenditures and $53 billion on R&D during the past five years, it also lavished shareholders with $35 billion in stock buybacks and $22 billion in cash dividends, which altogether used up 100 percent of Intel’s net income. Intel’s distributions to shareholders have been far greater than those made by either Samsung or TSMC, according to Lazonick.
Like Intel, IBM also decades ago focused on maximizing shareholder value. After drastically cutting headcount during the 1990s, IBM began distributions to shareholders in the form of buybacks, even as from 1996 through 2020 the company increased its annual dividend payouts. IBM did $51.4 billion in buybacks (79 percent of net income) in 1995-2004 and $119.7 billion (93 percent) in 2005-2014....
....MUCH MORE
If interested see also, "Taibbi: "The S.E.C. Rule That Destroyed The Universe" ":
