After further review, Sara Lee Corp. has decided to resume its stock-buyback program just one day after it suspended the stock repurchase.
On Wednesday the packaged-food and consumer-products manufacturer said it did not repurchase any shares of its stock in the first quarter. As a result, at the end of the quarter, about 25 million shares remained authorized by the board of directors for repurchase. “Given the current nature of the financial markets, most notably the credit market, the corporation has suspended its share repurchase program until market conditions improve,” it added.
The announcement infuriated Wall Street, sending the company’s shares down about 14 percent on Wednesday alone, and nearly 20 percent over a two-day trading period. So, after the market’s close on Thursday, Sara Lee announced it will reenter the market to buy back its shares “on an opportunistic basis,” citing the lower price for its stock. “At this time, the company has not identified the amount of stock that will be repurchased this fiscal year,” it added.
Sara Lee is not the only company that sees value in its depressed shares. Activision Blizzard Inc. said it would repurchase as much as $1 billion of its shares, or about 6 percent of its total market capitalization. Meanwhile, RF Industries said it plans to buy back an additional 100,000 shares of its stock, and Liberty Global said it boosted its stock buyback program by $250 million.
However, at least two companies said they have suspended their buyback programs — Genworth Financial Inc. and Swiss Re. “This was a disappointing quarter for the company, which was compounded by the ongoing turmoil in the credit, equity and housing markets,” said Michael D. Fraizer, chairman and chief executive officer of Genworth, which also suspended the company’s dividend. “In this unprecedented period, we are focused on maintaining appropriate liquidity.”