The Wall Street Journal's 'Heard on the Street' column reports (subscription required) on the less than impressive results of recent stock buybacks at public companies.

When a company buys back its stock, it pays cash to shareholders for their shares, and the retires them -- in a market where the vast majority of stocks are trading well of the highs the market reached last year, many recent buybacks are looking poorly-timed. The Journal writes that "General Electric (NYSE: GE) bought back $29 billion dollars of stock, paying an average of $36 and change for each share, according to regulatory filings. This week, it sold $12.2 billion worth for $22.25 each (before fees) and put $3 billion worth of warrants, with the same strike price, in Mr. Buffett's pocket."

The column goes on to argue that dividends "make for better financial discipline and more transparency." Of course that's easy to say right after the market has tanked, but it's a pretty illogical conclusion.

The main argument against dividends is that they're incredibly inefficient, adding an extra 15% cost. A company that pays out a large portion of its income as a dividend is effectively lowering its margins by 15% -- a move that seriously hampers long-term value.

Of course it's unfortunate that GE bought back so much stock only to sell it again at a lower price, but it's a mistake to form general theories about corporate governance based on anecdotal evidence culled from a once-in-a-generation credit meltdown. Given that shareholders of publicly companies presumably feel that their stocks represent a good value, it makes much more sense for corporate brass to hand them more stock with buybacks instead of cash to pay an extra tax on.

Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.

Mark Mowrey, editor of the Prudent Speculator TechValue Report, chose Cogent Inc. (NASDAQ: COGT), which rose 41% as of June 1, 2007. Although he maintains a $24 price target for those who own the stock, he no longer is recommending purchase.

For his new top idea, Mark looks at United Online Inc. (NASDAQ: UNTD). The advisor explains, "For as many reasons to be wary of the company, we find more to like about this net-centric company.

"Founded as Juno Online Services in May 1995, and formed via the merger of that company with fellow dial-up Internet services provider NetZero in June 2001, United Online is one of a select few surviving early Net access players.

"As UNTD milks the dial-up business for cash flow, management hopes to transition as many of those paying customers as they can to a new broadband offering. Still, revenue from the communications segment is declining at a rapid clip, falling 13 percent in 2006 to $375.9 million.

"So what is there to like about a company with declining revenue in its core business, the only savior for which is entry into an even more competitive space? The general answer is the provision of services folks utilize once they're already on the Net.

Motorola Inc. (NASDAQ:MOT) is going to give in to some if not all of Carl Icahn's demands. It's just a question of when and how much it will cost.

Ichan reported a 2.38 percent stake in Motorola yesterday, up from 1.39 percent in January, according to the Wall Street Journal (subscription required). His goal -- not suprisingly -- is for Motorola to spend $11.2 billion in cash to repurchase shares.

The one-time corporate raider wants a seat on Motorola's board, though stiring things up, not operations, is his strong suit. Motorola is urging shareholders to vote against Icahn, who would probably prefer not to attend one meeting of the company's board, or any other one.

Motorola shareholders should remember that Icahn has got his way with Blockbuster Inc. (NYSE:BBI), got Time Warner Inc. (NYSE:TWX) to increase its share buyback, and has gotten countless other companies to do what he wants, or pretty close to it.

The best thing that Motorola can do for its shareholders would be to figure out how to make Icahn happy. Otherwise, things will get real ugly real fast.

Microsoft Corporation (NASDAQ:MSFT): if you own it fine. If you are looking to make a lot of money, why buy it? Yes, we've heard about Zune. Big deal, I say. X-Box, so what? Vista might be real catalyst, perhaps. MSN a cash cow? That's another work in progress -- but it is a player.

I love MSFT's balance sheet, profit margins, and dreamy cash flow. But with all the stories about Microsoft and various initiatives, management and ideas, I just don't see what all the fuss is about. As a company it's nice. If you were along for the pre-2000 ride that is wonderful. But now it's a slow moving behemoth that will continue to grow a little bit at a time and never ever be what it was -- a high growth stock.

The stock buy back did not go as planned because management actually realized the shares are worth less and needed support. They could not buy enough because silly shareholders think the company is worth more than management does.

Well, I disagree with shareholders and agree with management instead. They will continue to be supporting the share price, keeping it from falling to $19 or $20 even as each new initiative is slow to add to revenue.

If you disagree with my view, as many will, then please stop telling us why the stock will rise and tell us what you think projected (speculation) earnings will be for each segment and what has specifically made you so optimistic. Throwing out numbers is ridiculous with no economic facts to back it up.

Why does anybody think the stock, now at $25.70, will be $30, or $35 or $60? Why shouldn't it be $19? Why shouldn't it have an average P/E? I would like to know. I would like to make some money too. I just can't figure it out -- enlighten me.