Thread regarding AT&T layoffs

Someone said: "I don't think it's a "looting". In exchange for the debt, they get an asset. Or in the case of a stock buyback, the remaining stock would rise in value, all other things being equal."

It's the executives that are looting the company. Stock buybacks are a waste of resources that produce no value except for the value of executive paychecks. We have become so used to financialized capitalism that we have forgotten what real investment looks like. Hint: investment is to enhance the means of production not create paper earnings that can evaporate in the next crash. Running up the debt to "grow the company" doesn't create any new value. It merely shuffles existing capital from one spreadsheet to another.

you want to buy a stock for the future look at RHT and look and see how they have performed. IBM just bought them to stay relevant. they power pretty much everything. azure uses them a lot too by the way lol.

But the problem, @wri, is that AT&T is paying an excessive amount of earnings toward their dividend, all so they can keep their 'dividend aristocrat' status. Growth companies don't usually even pay a dividend, let alone most of their earnings as a dividend.

AT&T can be an income stock or try to be a growth stock, but not both. Paying out your earnings in dividends while taking on massive amounts of debt for acquisitions is pure financial incompetence.

"loot the corporation via stock buybacks, debt fueled growth by acquisition.."

I don't think it's a "looting". In exchange for the debt, they get an asset. Or in the case of a stock buyback, the remaining stock would rise in value, all other things being equal.

The problem I'm seeing is artificially low interest rates by the Federal reserve, prompting lots of corporations to increase debt. In the last decade, corporate debt has risen 48% to $9.8T. And credit ratings have been descending to lower investment grade levels.

This Federal reserve manipulation of debt markets is why corporations borrow. And Trump wants the Federal reserve to resume printing money (called quantitative easing) to put more money out there for corporations to borrow. It's government orchestrated socialism for the 1%.

https://northmantrader.com/2019/06/23/free-money-socialism/

T is headed down the GE path. A once great, stable company that old ladies could safely buy and keep for a long time and make lots of money.... BUT, today T has too much debt, which is a result of poor strategic choices over the past dozen years AND nothing unique in the marketplace. No unique technology to wow customers or investors. Luckily for T interest rates are not rising, but when they do, the debt will crush the company. In the meantime, if you want a safe dividend stock that is GROWING too, has a bright future, and a dynamic CEO pointing their company in the right direction buy Microsoft. The stock has quadrupled since their CEO took over and is the ONLY challenger to Amazon in the cloud space. Which coincidentally T should own that space if T executives had some vision 10 years ago. T had all the pieces and made only a very lame effort in the cloud space. Oh well.

T is owned by just about every 401k and pension plan. Their job is about maximizing shareholder value. Yes, the execs have large holdings but show me a company where that is not the case. The pendulum has swung way out there on where and when people can work. It is swinging the other way now. Wish there was a happy medium.