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S&P 500 companies set stock buyback record

Aug. 24, 2006 at 3:31 PM

NEW YORK, Aug. 24 (UPI) -- Stock buybacks by U.S. companies in the Standard & Poor's 500 surged 43 percent in the last quarter from the same period in 2005, setting a record.

S&P said Thursday that stock buybacks in the S&P 500 reached $116 billion during the second quarter, up 175 percent from the same period in 2004 and eclipsing the $104 billion level set in the fourth quarter of 2005.

"The record $116 billion in buybacks is the result of over 40 percent of the S&P 500 companies reducing their share count during the second quarter," said Howard Silverblatt, a senior index analyst at Standard & Poor's.

"The unprecedented expenditure on buybacks and the resulting share count reduction is having a material affect on both earnings-per-share and cash flow. Left unabated, this will eventually impact the supply of open market shares, and therefore the share price itself."

S&P also said that companies are spending as much on stock buybacks as they are on capital expenditures.

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