“All else being equal, every dollar a company spends on shareholder dividends or stock buybacks cuts a firm’s market cap by a buck,” Kevin Kingsbury reports for The Wall Street Journal. “Without that river of cash, talk about when Apple will become a trillion-dollar company might have ended a while ago.”
“The company early this decade began in earnest to spend on both share repurchases and dividends after some sporadic activity dating to the 1980s,” Kingsbury reports. “Overall, Apple bought $201 billion of stock and paid $67.2 billion of dividends through the opening quarter of this year, according to FactSet data. Add a portion of that back to Apple’s $933 billion market cap and total share value would right now be well above $1 trillion.”
“Apple’s market cap will take a further hit this week as the company updates its share count a day or two after its Tuesday results release,” Kingsbury reports. “The company announced a record $100 billion stock-buyback plan in May and Chief Financial Officer Luca Maestri said then that repurchases would occur ‘at a fast pace.’ The rate has already been picking up, with shares outstanding falling 3.1% in the fiscal second quarter ended March. A similar reduction for this past quarter would cut Apple’s market cap by almost $30 billion versus current calculations.”
Read more in the full article here.
MacDailyNews Take: $268.2 billion in buybacks and dividends – and counting!
SEE ALSO:
Apple is within striking distance of $1,000,000,000,000 – July 31, 2018
Misguided and bogus.!
Please explain
Because cash is going down on assets side and shareholders equity is going down on liability side. Stock price will go up. Company value doesn’t change.
Amazon, Netflix, and Google go up on nothing, Apple wasting money buying back stock has done nothing. Long Apple…..
Totally agree. Apple is seemingly throwing that money away while the FANGs, especially Amazon, are using their money to grow their revenue base. Wall Street will always reward growth companies and ignore conservative companies. Compared to the FANG stocks, Apple P/E sucks.
I’m not complaining because I’ve done quite well as an Apple shareholder. I’m just pointing it out as I see it. Apple is always treated like a steel mill going out of business. Apple isn’t investing in undersea cables, satellites, or a nice cloud business like those other companies are being constantly praised for. Apple just buys back Apple stock that most greedy, big investors don’t want. They’re all be grabbing for that $2000 a share Amazon stock.
HUGE waste of money and they accomplished, what? …
Everybody seems to want Apple to do everything all the time, even when the desire is mutually exclusive. When they weren’t buying back stock, MDN went on a rant, as they are when they are buying back stock. Who gives a damn who reaches 1 trillion first. AAPL is currently the most valuable company in the world and has stayed that way under Tim Cook’s guidance. Is Apple more boring than under Steve Jobs’ guidance? Yes! The world is more boring without him, but AAPL has continued to thrive. For long term investors AAPL has been and is likely to remain a true gem. Samsung can’t sell an S9 at near 1000 dollar price point and the iPhone numbers remain sold remains flat, but Apple’s profits are way up (think $1000 plus iPhone X and close 8 plus sales). Meanwhile services grow and revenue sets records and keeps beating the street. Amazon sells at a massive PE ratio, while AAPL is 18:1. Quit the hystrionics and stop whining about the most successful company, ever!
FANGs for the memories! Watch the stock market buckle and the cybermedia hype burst. By end of Summer. Expected drop by 30%.
Stock buybacks result in an increase of remaining stock value. So the result is neutral.
You sell stock to raise cash, you buy back stock when you have cash and want to invest it back into the company. (and make your dividend payouts not sting so much)
True. And the dividend payments themselves increase the value of the shares. The anticipated future income from dividends are a factor in the valuation.
I believe that Jobs did not give away money; He saved it for bad times and they will arrive at some point and then what? Investors will bail out Apple? No.