But personally, when the overall market cap at Merck is around $250 billion -- and daily trading volume averages around a billion dollars a day... a $10 billion program is only ten days of volume, and looks to be... immaterial in the long run -- against that market cap. [Any silly sell-off might last more than ten trading days -- is my thesis, to be clear.]
Moreover, I've long thought that buyback announcements (perhaps unintentionally, I'll grant you) express an implied view from the CEO (Mr. Davis, in this case) that he cannot think of anything better to do with the scads of cash the company throws off. [Unlike some small caps, I firmly believe he will deploy the authority the board granted him, because he has scads of excess cash available.]
That is, I'd say the buyback is simply a bet that $10 billion being "invested" -- at [by definition] exactly the overall cost of capital, of the company. . . implies Mr. Davis thinks that may be better than funding a new therapy (with far less certain chances of ultimate success). To my eye, it is playing "not to lose". . . rather than playing "to win" -- with vast potential returns inside one's own lab awaiting (as we saw in the risks taken by Mr. Frazier, to grow up Keytruda, over the last decade).
Me? I'd rather play to win -- than basically invest in a forced / Merck-focused index fund, of sorts.
But that's just me. Your mileage may vary -- in fact, I am pretty sure it does.
But to be clear, as an ordinary shareholder, this program will not allow me to call up Rahway, and say "Hey, please buy back my shares" -- not without paying a brokerage commission, at least -- unless you might be an ex-employee granted that right in a long ago stock purchase plan. [And, for you old-skool folks, such a feature was not uncommon in the go-go 1980s. Sans commissions -- which used to be a much larger part of what it cost to exit an NYSE blue chip stock like Merck. Now you know.]
Onward, grinning into the sunshine. End, power alley -- for today.
नमस्ते
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