“Celebrity investor Carl Icahn made news when he bought over $1 billion of Apple stock earlier this year, but Icahn’s investment pales in comparison to the company’s own $60 billion stock buyback program, which gobbled up $16 billion in shares over the June quarter,” Daniel Eran Dilger writes for AppleInsider.
“At the beginning of the current quarter, Apple had $44 billion left of its buyback budget, which wasn’t due to be spent before 2015 according to the terms of the buyback plan,” Dilger writes. “It’s also optional; Apple could decide to stop buying shares and simply let the plan expire. However, given that Apple splurged a third of its allocated share buyback funds in the June quarter to buy up 36 million shares at an average price of $444, it appears likely that it has continued to aggressively take advantage of its acutely low stock price over the past three months.”
Dilger writes, “Apple could turn in another record quarter of buybacks that match or exceed the value-performance of the June quarter, easily erasing another 36 million outstanding shares or potentially as many as 100 million shares, were Apple to buy all the stock its current buyback plan allowed at the price levels available in July.”
Much more in the full article here.
Apple is so lucky to buy its shares that cheap .
Lucky, yes — and smart.
Just me thinking out loud; they may be trying to buy back as many shares as possible, as soon as possible, before they release ‘the next big thing’. After all, they do have insider information!
Especially if they are going to release payments and are confident in its development/rollout. They may wait a little while to observe reaction to Touch ID though. In any case, you’re right that striking while the iron is hot right now could be a great defensive move.
Historcally, the “next big thing” from Apple has always resulted in a short- and mid-term DROP in stock prices, because the Street always sees it as ridiculous, not revolutionary, until a year or two later.
When the real purpose of their massive server farm buildout is revealed (it’s shocking that analysts don’t consider this) the stock will go MUCH higher. The control of the most persuasive and lucrative form of video…in high quality…is moving toward Apple. I once met the father of a VERY high level Apple employee…(yes take this for what it’s worth…which may be very little..but I tend to believe it) and he said she told him, “Dad, it’s amazing but Apple actually has a 25 year plan and so far with a few minor diversions, they’ve followed it and it has worked out very well.” She went on to say that Jobs was behind this strategy, anticipating both technological trends and customer preferences. The idea that they have stopped innovating, or that they have peaked is so ludicrous it doesn’t deserve to be discussed. The company with the most money, that has proven time after time after time that it can create, innovate, and topple industry after industry is done? Oh man. Apple has a bright future and video…high quality content video (not skateboarding dogs or shows produced in a studio in Encino) are what people want and will pay to see.
25 year plans are great, I bet Google / Android has a plan like that too. Same with Samsung.. and a ton of market share to boot… NOW…. thanks Dad…
Let’s talk about quiet incompetance.
Einhorn recommended that Apple borrow 50Bln or issue preferred stock with a seemly perpetual maturity. At the time Cook scoffed at Einhorn’s idea even though at the time interest rates were at an all time low. Then Cook reverses himself and after talking with Einhorn decides on a bond issue to fund to fund Einhorn’s $50 bln idea.
So what happens the bond issue hits the market at record low interest rates and gets oversubscribed to the tune of $52bln. Instead of grabbing the entire $52bln Cook only takes $17bln and then spends $16bln in 3 months so the treasury might only have $1bln left of the market’s cheap money as of July 1st.
Due to slow product development and unfilled new product promises the stock is still cheap ( ask Carl Icahn. Einhorn’s idea was to issue a interest bearing instrument that would allow Apple to buy back a large amount of sharers paying interest rates that are less than the dividends on these shares and keep their cash stash of $145bln for corporate purposes ( Acquisitions, R&D, marketing, capex, ect.)
Unless Apple wants to dip into their cash stash for buying back stock at higher prices they probably are for the time being stuck with some buy backs. Their only alternative is to now go out and reissue more bonds at much higher interest rates .
I call this quiet incompetence. I tried to get this comment published on Apple Insider but apparently they will not post my comments.
Can’t the other Apple businesses outside the US buy Apple’s corporate bonds, essentially on shoring the money as a loan and avoiding paying corporate tax on it? Apple Europe could buy $20 billion in Apple bonds and gain interest while Apple buys its shares cheap. If the shares go back up to $600, they can sell them and pay back their subsidiaries?