Buybacks At Oracle, The Frightening Stupidity Of Greed, A Sisyphus Tragedy | Exploring Markets

Buybacks At Oracle, The Frightening Stupidity Of Greed, A Sisyphus Tragedy

There's a great chart floating around showing the total buybacks that Oracle and its CEO Larry Ellison have initiated over the years. It's a pretty stunning number. The chart then puts this number vs. its total capital expenditures.

And that's even more stunning.

You may think that a company would naturally want to allocate more capital to research and development, property, plants, and equipment than to repurchasing its own shares. It seems that the former would drive innovation, efficiency and other goodwill within the company. But that is not the case at Oracle. Here's a chart from ZeroHedge and CapitalIQ showing the complete opposite:



Charts like this make you wonder about the life cycle of companies. Especially enormously sized companies that trade on major stock exchanges. 

At what point does the meaning of the stock become more important than the company itself? And at what point does that manifest itself into the eventual decay of the company?

The Greek tragedy of Sisyphus comes to mind when confronted with charts like this. The story being that Sisyphus was forever punished for his wrongdoings. Each day he had to roll giant boulder up a hill. But at the end of the day the boulder would simply fall right back down to the bottom and Sisyphus would have to start over. 

Share repurchases may drive stocks higher. But they are not creating any real meaningful value or investment for the company's future. Like Sisyphus, it will drive the price up on the charts, but only for it to roll right back down.