“Tim Cook and Luca Maestri are literally buying back Apple shares as fast as they can. When comparing the pace of Apple buyback over the past six months to that of the program’s previous three years, it is clear that management made the decision to be opportunistic to take advantage of Apple’s languishing stock price,” Neil Cybart writes for Above Avalon. “Apple management is showing an increasing level of confidence in its future.”
“While everyone quickly focused on iPhone unit sales growth guidance and clues about Apple Watch sales when Apple reported 4Q15 earnings, one data point that jumped out at me was the amount Apple spent on share buyback,” Cybart writes. “Management bought more shares in the open market last quarter than any previous quarter. In fact, when looking at the past six months, including the most recent ASR (accelerated share repurchase program), Apple bought back $24 billion of its shares, which is a record for any six-month stretch. All of this is made even more remarkable when considering that Apple’s stock price is more than 60% higher than when Apple began buying back its shares in late 2012. This shows management remains quite optimistic about Apple’s future and value found in Apple shares at current price levels. ”
“Tim Cook and Luca Maestri are likely becoming more confident in Apple’s future when looking at iPhone’s position in the smartphone industry. The ability to entice Android smartphone owners while serving as an aspirational brand causing consumers to strive to move up to iPhone’s price layers represents a long-term positive. In addition, while this may be just a coincidence, Apple management increased the pace of buyback in February 2015, around the time reports came out depicting Project Titan and Apple’s growing ambitions with electric cars,” Cybart writes. “We are seeing a management team that is betting big on a future that the stock market is still unable to see.”
Tons more, including informative charts, in the full article – highly recommended – here.
MacDailyNews Take: When hundreds of millions are upgrading their high-margin iPhones every 12 months, it’s tough to not be extremely confident.
Keep buying, Apple, while the buying is so good.
I’m buying more too!
Perhaps they can spare some time and money, when they get a moment to employ some engineers and coders to sort out some of the software shortcomings rather than playing share poker. After all that is or at least was their business priority at one time.
I was going to say that they were probably pretty confident that the new AppleTV was ready to be released, too, but your post is much better.
No, Apple realizes the more shares Apple owns the less money Apple has to pay out in dividends. Now if they would just stop borrowing money to pay out money they already have.
All publicly held companies should pay out to shareholders 80% of the profits made during a quarter. Yes the companies can buy shares back if they want to hold on to more of the profits. If they are willing to that I’m willing to go along with companies pay no taxes, only dividends will be taxed, 15% is good enough.
And for those who start whining about people who believe “companies owe them a living because they invest”… Think about your 401K…
Thanks, Apple management, for making my (existing) AAPL shares represent a larger portion of Apple. 🙂
How, they are not burning the share they buy. At a future date, they can sell the shares they have purchased. Then, too, how dumb was it to do a 7 to one split only to buy the shares back. If they go private, then what?
No best to pay 80% of profits to shareholders. That in itself would drive up share price. Yes, Tim is doing things for shareholders, buy back, borrowing money to pay shareholders dividend, etc.
Apple is taking AAPL share OFF THE MARKET, not keeping them to sell later. Therefore, every share Apple buys back (on the open market) is one fewer share outstanding (being traded). And it HAS gone down steadily. Two years ago, there were about 6.3B shares outstanding. Today, there are about 5.6B.
When the number of shares outstanding goes down, the total worth of Apple (including all of that CASH) is divided by a lower number of shares. Therefore, each share represents are larger portion of Apple. Therefore, my ownership of Apple goes up, with the same number of shares owned. Apple doing stock buybacks is equivalent to me buying more shares, except I don’t have to buy any more shares. 🙂
As long as they are not doing this to appease some Wall Street idiots.
No. I think The Goal of this share buyback program is so Apple becomes a private company again, and is no longer at the mercy of Wall Street shenanigans.
Doofus. Apple cannot use company cash to become private. They would need to raise the money independently to buy the company. And for Apple that would be around $1 trillion.
Buybacks reduce the overall # of outstanding shares (and reduce the availability of shares). The market cap will still be price x outstanding shares.
Between you and bob, I’m not sure if you are serious or just trolling.
GOOG wants to sell more even shares to keep the ponz scheme going for another six months. Which is just long enough for Eric T Schmidt’s face surgery and fingerprint transplants to heal.
This article is a week old.
“While the buying is so good” might be accurate. I own Apple but I am in a much more bearish mood these days.
Confidence in its future? I think the main reason is to to keep the share price up and thus ensure their own bonus payouts. If it was about confidence, they would invest in R&D, in product development, in sales & marketing, in people. Maybe they’re just out of ideas what to do with all the cash.
Why do Shareholders assume they own a part of the company, by owning shares!!! The fact is you own shares only.
Shareholders do not have a right to manage the company or its assets. Instead, they “elect” directors for that purpose. Shareholders can vote on resolutions to constrain management, but that`s not a right to manage the assets of the company. Most votes at annual general meetings of UK corporations are advisory rather than binding. Directors owe a duty of care’ to the company and not to any individual shareholder.
Shareholders invest in the hope of getting a return on their investment, but do not have the right to demand income from the assets owned and used by the company. Shareholders can receive dividends but only after directors agree to declare them.
Shareholders can continue to enjoy the benefits of shareholding, as long as the company remains in existence, but cannot recover the capital represented by share certificates from the company. They can sell their shares to another party and can transfer or bequeath shares to successors, subject to the taxation laws of the country. The share certificates have some value, as long as the company is solvent. But that`s it: a speculative commodity not a control.
Directors of a company can sell the assets held by the company, but shareholders do not have rights to receive the proceeds. Shareholders do have a residual interest in the event of bankruptcy, assuming that the assets have been sold to satisfy the prior claims of secured and unsecured creditors. However, they might still not suffer the ultimate loss of their investment as the state has bailed-out banks and other corporations.