Question-and-Answer Session
Operator
Thank you. (Operator’s instructions) And our first questions from the line of Kevin Liu from B. Riley & Company. Please proceed with your question.
Kevin Liu - B. Riley & Company
Hi, good morning guys. For this tender offer, I’m just wondering if you could provide us with a little bit more thought about how you guys came to the conclusion that this should be done at this point in time. It would just seem to me that - it doesn’t make sense that you want to do more of a discretionary cash payout and maybe reduce the equity grants here at this level. But at the same time, wouldn’t it make more sense now to be able to repurchase stock, close out to fiftyish yesterday? Seems like by all evaluation metrics that’s extremely cheap and you want to take as much advantage of that as possible in this environment. So overall, just wanted to get your thoughts and where you see the benefits to shareholders.
Adam Gutstein
Kevin, over the long-term what this is going to do is this is going to reduce the share count, and because we will be issuing much less in the way of annual employee equity grants, it will mean that we will not have to spend as much cash in the market to execute buy-backs. So it will allow us over time to manage our cash better. What it does for investors in the short-term is it reduces the overhang and it gives certainty to that overhang very quickly. What it also does is it improves earnings, almost immediately. Not in the fourth quarter, obviously, but beginning next fiscal year.
In addition what it does is it will allow us to increase the investment in the company to drive growth. And for us, growth is critical, as much as these are difficult days in the economy, these days will not last forever. And as more normal times return, we need to be positioned to grow, and this will free up room on the income statement, allowing us to better invest in the firm. It’s marketing, it’s positioning, it’s branding, its training and development of people and so on and so forth.
Finally, what I would also say is that from an employee standpoint, equity is not the best of incentives. When the company was originally put together, it was a different time, it was a different place and it was a different set of employees. Today, employees are looking for clearly a more predictable and more certain outcomes, and we believe cash is a better incentive.
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