Apple’s incredibly shrinking diluted share count

“By the time it decided in April to increase its stock buyback program five fold — from $10 billion to $60 billion — Apple (AAPL) already spent $1.95 billion of the original $10 billion fund and had bought and retired nearly 4.1 million shares of Apple common stock,” Philip Elmer-DeWitt reports for Fortune.

“That leaves, by Robert Paul Leitao’s calculations, $58 billion to be spent over the next 11 quarters,” P.E.D. reports. “Leitao, who writes the Posts at Eventide blog and oversees the Braeburn Group of independent analysts, used two assumptions to create [two] charts… That the $58 billion would be spent in equal parts of approximately $5.272 billion each, and that Apple’s share price would rise $25 each quarter from $475 per share this quarter to $725 per share in fiscal Q1 2016 (the last calendar quarter of 2015).”

P.E.D. reports, “By the end of the program, Apple will have repurchased just under 100 million shares, or approximately 10.55% of its current diluted share count. The company will save more than $2.230 billion in dividend payouts on the retired shares — even if it increases its dividends 10% each May. That works out to a savings of nearly $370 million each quarter, or nearly $1.5 billion per year moving forward.”

Read more, and see the charts, in the full article here.

19 Comments

  1. It was a good move by Apple. As was the increase in the dividend. Sometimes you have to spend money to make money. What? You thought the recent rise in AAPL was just a coincidence? C’mon.

    1. The rise in Apple is because the people pulling the strings finally got what they wanted when they started tanking the stock price. They forced Apple to make it rain. That’s all it was ever about: stock manipulating to get into the stockpile.

      1. Than what accounts for the rise in the stock price of Apple last summer? Were the same people pulling the strings last summer? They must’ve been. Or do you claim that the parabolic rise in AAPL last summer was logical? You can’t have it both ways you know.

        1. Um. Have you followed Apple media coverage for the last year and a half? Of course the meteoric rise was manipulation! It was to overhype Apple so much that they couldn’t possibly deliver, and to allow the people pulling the strings to basically print money all the way up and all the way down.

          Notice that the share price bottomed out just above where it was when Cook took over. Apple had, strictly speaking, lost no money since he took over. But the media coverage and pressure from the Wall Street “geniuses” has made us believe that they have because, up until iPhone 5, Apple could do no wrong–and ever since, Apple has been doomed. That’s the narrative. And I say narrative because all it is, is a story. Fiction.

          Now that everything is back to “normal,” it seems like a reasonable conclusion that the endgame was to put pressure on Cook and either get him to open the floodgates or replace him with someone who would.

  2. Robert’s numbers are always good for an article, but not much else.

    To use a flat $25 per quarter appreciation rate means that AAPL’s actual % appreciation rate is declining, and doing so rapidly. AAPL’s % growth rate may slow, but not until after it regains its all time high ($705). Even then, with modest growth in revenue and EPS, Robert’s model suggests a continued decline into single digit PEs.

    As mobile competitors (RIMM, Nokia, HTC, Sony, Motorola, etc) fall by the wayside, Apple’s unit and profit share will increase.

    This is not the scenario for flat equity appreciation.

    1. And what good are your numbers? It’s more wild speculation. Single digit P/Es? Guess what – we were already there, so why is so hard to believe?

  3. Of course, what articles like this fail to mention is that when a company buys shares back and retires them, the money used to purchase those shares disappears along with the shares. Nothing is left.

    I’ve never been in favor of share repurchase because of that. The concept that equity per share will increase is a hazardous factor to rely upon. If they are going to throw the money away, which is what happens with share repurchases, I would prefer they give most of it back to shareholders instead. At least that way, the money is going somewhere rather than going up in smoke.

    1. I would rather apple make my shares more valuable than let Uncle Sam Take a third of my value now. I suppose if I did not have a job and wanted to live off dividends I would have a different oppinion.

    1. I don’t see that. The number of shares may decline, but someone owns them. If you want to take Apple private you have to buy the company regardless how many shares are outstanding.

    2. Theoretical total B.S., althegeo. There are around one billion shares of AAPL on the market. Apple will retire a modest amount through the repurchase program, but the company is also issuing new stock for its employee programs. In order to ‘take Apple private,’ someone or some group would have to come up with hundreds of $B in cash and securities – figure a fairly hefty premium on the existing market cap at the time of the buyout.

      Why do you and others feel so strongly that Apple would be better off as a private company?

  4. If apple buys their own stock until there is none left, is that the point where they go out if business? Is apple killing itself intentionally ?

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