CSX Announces Additional Stock Repurchase

[Lifted from UP Employee Website, Industry News]

CSX Corp. said Tuesday it will repurchase an additional $1 billion in company stock, hike its dividend by 25 percent and make significant capital expenditures over the next four years, The Associated Press reports.

The additional share repurchases raise its current buyback program to $3 billion.

The company also said it would hike its quarterly dividend beginning in September to 15 cents from 12 cents and plans to invest $6.4 billion in its operations over the next four years [emphasis added]. CSX will spend $1.5 billion in 2007, $1.6 billion in 2008 and 2009 and $1.7 billion in 2010 to meet expectation for increased freight demand. CSX will target its track, equipment, technology and facilities.

Well I appreciate them driving the price of my shares up, though I guess if I don't sell it doesn't matter. I'm better off, at least on paper. Thanks too for the extra dividend. BUT-- What I really want to know is what improvements are they doing, and how much more money is this plan then the capital plan they announced several months ago? Is this really an increase in capital spending, or simply a way to make the by back look better to the press? What "new" capacity improvments are planned with this "new" money, especially on the A line? Anyone know. Thanks.

The sizzle you hear...is the books, cooking.

Great news, if true. But I also question where the money's coming from...additional capital expenditures, repurchase, and higher dividends. They find a money tree on the grounds at Greenbriar?

It has to be pointed out that MONEY SPENT does not by itself translate into a better physical plant. I'm hoping they can find, in their ranks, a REAL railroader who can try to keep them from spending the money on WELCOME! signs, safety posters, and RESERVED PARKING markings.

conrail_engineer wrote:The sizzle you hear...is the books, cooking.

Great news, if true. But I also question where the money's coming from...additional capital expenditures, repurchase, and higher dividends. They find a money tree on the grounds at Greenbriar?

It has to be pointed out that MONEY SPENT does not by itself translate into a better physical plant. I'm hoping they can find, in their ranks, a REAL railroader who can try to keep them from spending the money on WELCOME! signs, safety posters, and RESERVED PARKING markings.

Until stock holders vote him out and get someone else in who just looks at the numbers.

conrail_engineer wrote:Great news, if true. But I also question where the money's coming from...additional capital expenditures, repurchase, and higher dividends. They find a money tree on the grounds at Greenbriar?

On the balance sheet, published in the annual report, it's called EARNINGS FROM CONTINUING OPERATIONS.

http://www.csx.com/share/investor/pub_a ... F23661.pdf

Yeah, yeah, I know -- you don't trust that either...

True. There are things I see that don't suggest prosperity; or, rather, suggest a little frantic desperation on some individuals' parts.

Time will tell...

conrail_engineer wrote:Time will tell...

That it will. You may just be right about the desperation part. Watch the share price!

Well, two incredibly bright investors have different takes, and they tell a big story about CSX.

Jim Cramer is all over this stock. He loves the buyback, and says it's about damn time. He rates this a buy.

Warren Buffet hasn't bought any. In the mean time, he's bought HUGE chunks of BNSF, UP, NS. Recognize a pattern? Like, CSX is the only one of the big four missing? Obviously, he thinks the railroads are a good play and CSX is the black sheep.

Here's the real story. I think both men are brilliant, but they have different philosophies. Cramer buys when the share is underpriced relative to where it should be, and sells when it gets overpriced - if that's tomorrow, take the gain and get out. Buffet buys solid, well-managed companies and holds them for years. In summation, Cramer is looking for discrepancies in value, without any regard for long-term prospects; Buffet wants a long-term cash cow. Neither philosphy is bad when performed correctly, but they sure as heck show CSX is a valuation play that isn't worth holding for a long term. Reading between the lines, CSX's long term prospects aren't as good as the others, and it's only a value discrepancy trade.

Disclaimer - I have no position in CSX or any other railroad company right now.

Well said.