Beacon Transcript – Facebook Inc announced late this week, on Friday, that it will be buying back a part of its shares accounting for an $ billion sum and that it will be changing its CAO.
The Facebook Inc announcement came as part of a Securities and Exchange Commission or SEC filing.
According to the SEC filing, the company’s board of directors has given its approval in the decision to repurchase Class A common stock shares. The buy-back is estimated to come to a total sum value of $6 billion.
In the SEC filing. Facebook Inc expanded on both the timing and the method in which the $6 billion buybacks will be carried out.
It will be initiated sometime in 2017, during the year’s first financial quarter, and will not have a time limit or expiration date.
The actual number of shares and the time period in which they will be bought back has not been established and will depend on a number of factors.
Amongst them, representatives included the share prices, market condition, general business, and also alternative investments opportunities.
The buy-back will be carried out simultaneously with the new Facebook Inc capital allocation strategy. The new capital allocation will seek to prioritize investments that will lead to long-term company growth.
Shareholders will most probably benefit from the buy-back as Facebook seems to be concentrating on a maximization of the intrinsic per share rather than the long haul.
Through the recently announced $6 billion buy-back program, Facebook could also be trying to take advantage of the recent share pullback. Since early November, share value has fallen by about 8.8 percent.
Some analysts are considering the share buy-back as being a consequence of the company’s November 2 third quarter year reports.
Although Facebook Inc reports exceeded market expectation, their stock fell by 8 percent following the company announcement that 2017 was going to be a spending’s year.
Through the new program, Facebook Inc may also be seeking an indirect excess cash return to its shareholders.
As the recent quarter reports showed, the company marketable and cash securities rose to a $26.2 billion value. When compared to the same period last year, which saw a $18.4 billion value, the raise is quite significant.
This is not the only area to have marked a significant increase. The Facebook Inc so-called free cash flow, which marks the cash from operations minus the required capital expenditures rose to $2.5 billion. Last year’s same quarter saw a free cash flow sum of $1.4 billion.
This will not be the only Facebook Inc change as the company also announced in a separate and most probably unrelated statement that it will be changing its CAO.
Jas Athwal, the current Chief Accounting Officer, announced his plans of resignation after spending nine years with the company.
As Facebook Inc will begin its search for a new CAO, Athwal will oversee the year-end audit and annual reports, and will most probably step down on February 17, 2017.
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