Friday, February 11, 2011

Disappointment regarding Rio’s proposal of buyback

Disappointment regarding Rio’s proposal of buybackThe proposal made by Rio Tinto has caused dissatisfaction among the investors. It has also resulted in the decline of the shares of the miners in the stock exchanges of London and Australia. In spite of bumper profits the shares of the miners have been losing grounds. There has been a huge amount of cash which has been generated as a result of booming commodities in the markets. This allowed Rio Tinto to provide returns of about five billion US dollars to the shareholders. Rio Tinto did so by buying back the shares which were priced lower in the stock exchange of London. According to the reports of global miner there has been a rise in the net profit which has tripled in the year 2010 and has reached to 14.32 billion US dollars which is a record in itself. The net profit has increased by 194 percent in terms with the previous year.

The shares of Rio Tinto were reported to close in London at GBP 45.49. The shares had declined on Australian bourse by 91 cents or in other words by 1.03 percent. The shares finally stood at 87.77 dollars. A market analyst at IG Markets, Cameron Peacock, said that there had been huge expectations regarding the buy back of the shares and thus 5 billion US dollars was in the end a cause of disappointment in the market. The expectations about the net profit were about 14.1 billion US dollars. It has always been the trend about people buying the shares with some expectation and if the things fail to turn out as anticipated then there is some selling done in the market. There were reports that Rio Tinto has made reductions in their debt and has announced a final dividend which is about sixty three US cents per share. This dividend is higher than that given by the company in the previous year2009, which was at forty five US cents per share.source

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