by Debbi A. Ballard copyright, 2010, Debbi A. Ballard All rights reserved worldwide.

USANA and other public mlm companies have repurchased stock shares in the past. When an mlm company repurchases its shares of stock, what does that mean to you?

When an mlm company is public, it is under pressure to meet the earnings expectations of its shareholders. When the industry is in a highly competitive environment, as it is now, there can be a struggle between meeting the demands of the shareholders and, at the same time, meeting the demands for strong compensation by the independent networkers.

In other words, do you pay your networkers more to meet competitive demands and show, perhaps, less earnings per share, or do you pay your networkers less and show higher earnings per share?

Due to this challenge experienced by public mlm firms, some have actually gone back to being private companies. When a company repurchases its stock, this typically does not mean, however, that the firm is going to become private.

What, then, are the most popular reasons why a company will repurchase shares?

In an article on economist.com, the publication notes three reasons:
a) the company wants everyone to know that the shares are undervalued
b) management wants to have enough shares for employees to cash in their stock options without any dilution of shares or a negative impact on the balance sheet
c) the company wants to provide some cash back to shareholders.

The article also reported that Bloomberg wrote that of the 1500 companies that had announced repurchases between 2000 and April, 2004, “two-thirds were trading above the S&P 500 after 12 months.”

If you invest in mlm companies, you may want to track companies that are repurchasing their shares and consider taking advantage of any increase in share prices that might occur. If you are an independent networker or looking to become one, you might also want to flag such companies when examining the various network marketing opportunities available. Of course, when making an investment decision or selecting an opportunity, make sure you evaluate the many other variables involved.

If you watch when an mlm company repurchases stock shares, you just might end up making a wise investment.

To secure additional information: http://www.economist.com
“A Valuable Alternative to Empire Building,” The Economist Global Agenda, April 19, 2005

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