Hollywood Entertainment Repurchases $30M of Its Shares27 Aug, 2003 By: Erik Gruenwedel
Sensing a “significant excess cash flow in 2003” and seeking the “highest possible [return on investment] on excess cash,” Hollywood Entertainment Corp. has repurchased about $30 million of its common shares after amending a provision that prevented share repurchase.
The Portland, Ore.-based parent of Hollywood Video, which spent $100 million expanding the unit's rental and video game properties, says it will repurchase another $10 million in common stock by the end of the year.
“We could keep it in the bank and earn 1 percent, save 5 percent in interest, or buy stock,” said a source familiar with the company. “Earnings per share are increased more by purchasing stock than by saving interest expense. If the board thought the stock was overvalued [it] wouldn't be buying it.”