“With Apple Inc.’s repurchases staking a claim as the most profitable on record, buybacks remain one of America’s most popular antidotes to bears,” Oliver Renick and Joseph Ciolli report for Bloomberg.
“The iPhone maker is up 25 percent since it spent $18 billion on its own shares between January and March and rallied 32 percent after a $16 billion buyback in 2013,” Renick and Ciolli report. “Those are the highest four-month returns among the 20 biggest quarterly repurchases by any company since 1998, according to data compiled by Bloomberg and Standard & Poor’s. S&P 500 constituents have spent $211 billion on their own stock this year amid concern the five-year bull market is prone to selloffs such as last week’s 2.7 percent retreat.”
“‘[Apple’s] timing was impeccable,’ Todd Lowenstein, who helps manage $16 billion at Highmark Capital Management in Los Angeles, said in a July 31 phone interview. ‘They went in big, and it said to the market that they had confidence in their business plan and thought their stock was grossly undervalued. That’s worked out well for them,'” Renick and Ciolli report. “The ratio of Apple’s per-share profit growth to its overall earnings has increased due to buybacks. Per-share income climbed 19.6 percent last quarter from a year ago compared with a 12.3 percent rise in net income.”
Read more in the full article here.
Buybacks make a lot of sense for a company in fiscal terms. Lower cost of dividends and higher earnings per share. It also may have helped prime the pump to get Apple’s share price up again.
$34BB is a lot of cash though. With 6BB shares outstanding that is equivalent to nearly $6 per share or 3 years of dividends at the current rate. Still the stock is up $25 in 2014 and up $40 from its low in April 2013 so looks like money well spent.
Thank you Peter Oppenheimer!
Back when SJ was alive and he asked Warren Buffet what to do with the cash he was told back then to buy back his shares and they were a quarter of what they are now .
If only!!
Apple knows that Apple has a bright future even if Wall Street doesn’t
But perhaps the boost in share price is over? Since AAPL nearly hit $100 it is now falling rapidly toward the split of $92.22. The shorts are at work again? With no new phone until next quarter igadget sales will slow considerably. Would you buy a 5S now?
I’d seen some articles saying about how some investment brokers were grousing because they think that Apple should have been doing more with their money than buying back shares and that Apple is doing the buybacks because they’ve lost their sense of innovation. I’m not sure what one has to do with the other because a company with plenty of cash can do any number of things rather than just one or the other. Apple’s innovation will happen when it happens and no investment broker can call the time. It’s claimed that Apple can’t do much to move the revenue needle at this point unless it were to acquire some huge company. Maybe that’s true but there’s absolutely nothing wrong with Apple growing at a rate of a couple a percent a year which is certainly better than no growth at all.
Apple’s business must be pretty unusual that hardly anyone on Wall Street believes Apple has a good future. It must be a nearly universal belief. I’m somewhat surprised that Apple’s retail stores don’t count for any advantage in regard to selling products. I figure once anyone goes into an Apple store, they’re not coming out with some other company’s product and that would seem to be a terrific way to have a lock on a consumer.