Yahoo! to buy back $3bn worth of stock

Yahoo decided to buy back $3 billion worth of stock over three years or 15% of it's equity. In my write-up With the Share Price Lagging Peers, Time to Lever up and Shrink Equity we argued that Yahoo should do just that. In fact we stated:

"Furthermore, it is time to lever the balance sheet. According to our calculations, the P&L can comfortably sustain interest expense from about $3 billion of debt or leverage of under 2x, to which management can use to shrink the equity cap by 15%."

Glad to know management is reading our writing :-)