Regarding Green Packet's Share Buybacks.

Fellow blogger, Dali, has written a truly wonderful piece on share buybacks, on Star Bizweek, called Why buybacks fail.

I would like to point out two paragraphs.

• If a company has to resort to improving its share price by reducing free float, it is rarely successful. By reducing free float, it is a futile exercise as the company will have to accumulate a significant amount to prop up the share price – that seems artificial no matter how you look at it as the only group really keen to own the shares is the company themselves.

And ...

• Bottom line, if it is not going to be cancelled, share buybacks are not really that big a positive in rating the company. Most times, companies who carry out share buybacks do not see significant improvements in their share price. Investors do not rate a company higher because of such an exercise as they are not buying the stock in the first place for various other reasons. In addition, the free float is not really a major factor. A worthwhile share buyback is one that subsequently involves the cancellation of the shares that have been bought back. Companies that do not do that, need to ask themselves why their share price is not at a level where it should be. Are investors not happy with the management's vision? Is the company not communicating its plans effectively? Has the company not been able to chart a credible track record? Have the financial results for the company been haphazard or inconsistent? Is the company unfocused or too diverse that nobody wants to follow/research the company? What is the management's track record in dealing with minority shareholders? Have transactions or deals been fair to all shareholders or been forced down investors' throats?

Here is one GLARING "LIVE" example.

Green Packet.

1. Dec 26th. 2007 Notice of Shares Buy Back - Immediate Announcement

Lowest price paid 2.38. Highest price paid 2.50.

2. Dec 27th. 2007 Notice of Shares Buy Back - Immediate Announcement

Lowest price paid 2.43. Highest price paid 2.53

3. Dec 28th. 2007 Notice of Shares Buy Back - Immediate Announcement

Lowest price paid 2.54. Highest price paid 2.80.

4. Jan 2nd 2008. Notice of Shares Buy Back - Immediate Announcement

Lowest price paid 2.80. Highest price paid 2.93.

So, from Dec 26th 2007 to Jan 2nd 2008, Green Packet's share buybacks saw it paid a lowest price of 2.38 and a highest price of 2.93!

Consider the points Dali made and do put that into perspective of Green Packet's current share buybacks.

Do you like what you see?

Well for the record, Green Packet, share price has been performing terribly.

Have a look below.

Green Packet's highest traded share price was 2.94 on 31st Dec 2006. GPacket closed at 2.77 yesterday, 4th Jan 2008.