Apple’s $400 billion buyback program

“One of the more certain items found with Apple’s upcoming 2Q19 earnings is that the board will approve increases to the company’s share buyback authorization and the quarterly cash dividend,” Neil Cybart writes for Above Avalon. ”

“The two capital return initiatives continue to be polarizing topics as Apple holds more than $100 billion of excess cash on the balance sheet,” Cybart writes. “A closer look at Apple’s buyback and dividend trends suggests the company’s board still has a strong incentive to increase Apple buyback authorization in a big way next week.”

“My expectation is that Apple’s board will approve an increase in buyback authorization in the range of $75 billion to $100 billion. This will bring Apple’s overall buyback authorization to approximately $400 billion,” Cybart writes. “My expectation is that Apple’s board will approve a 14% increase in Apple’s quarterly cash dividend to $0.83 per share, up from $0.73 per share. ”

Much more in the full article – recommendedhere.

MacDailyNews Take: Bring ’em on! Those buybacks are simply massive and the dividend are a nice little reward for those smart enough to own Apple shares!

12 Comments

  1. Steve Jobs produced delightful products that mostly just worked; He did not give away money.

    Why reward “pumpers & dumpers” who are blood suckers with dividends, unearned free money?
    Why reward short sellers with dividends, unearned free money?

    Why can’t Apple use that money to start a bank instead?

    1. Dividends make sense. They pump money into the economy which makes the economy grow (as well as helping savers like me build a savings for retirement).

      Stock buybacks on the other hand are deflationary. Other than burning cash, stock buybacks are one of the few ways to destroy wealth. But it’s an action encouraged by the GOP’s Tax Scam™ passed in 2017. Our country would be better off if all the money from buybacks was spent on taxes instead so at least the money would be circulated in the economy.

      1. We need to pump and dump the Dingler and the Tommy Boy, and MDN and the world of Apple will be better places. Take Apple Cyscummic with you, too.

        1. Well that was such a lovely contribution to the discussion. You provide another nominee to add to MDN’s growing ban list: you, you worthless hate filled troll.

    2. “Steve Jobs… did not give away money.”

      When Steve Jobs died Apple had maybe $40-50 billion in the bank. Apple is now sitting on a quarter trillion dollars of cash. And Tim Cook isn’t “giving away money”, he’s transferring it to the shareholders who own Apple.

      Apple should be investing the money they earn into their operations, and into creating future product lines and businesses. I’d even like to see them make some bold, strategic acquisitions if they make sense.

      Apple has enough cash to do that and provide some to the people who own the company.

      1. The supremely wealthy Apple does not need outside ownership so keeping them makes no sense because investors in such a supremely wealthy company add no value. They added value only when Apple needed to get the company going.

        1. The owners of a company don’t add value to a company, the company adds value to the owners : )

          You could argue my toaster doesn’t need an owner, but well, what’s it going to do about it?

          1. The staff creates value for the company by selling products and services it creates while investors, who are no longer needed in a wealthy corporation such as Apple is, remove value, worse, they are a burden and a distraction.

            1. My toaster creates value, as does the bread that works away within the toaster. I am a burden and a distraction to my toaster. But once again, the fact remains: I own the toaster.

        2. The philosophical topic of whether publicly traded versus fully private versus public-private partnership makes the best sense is an issue that will never be solved especially in a forum like this. But the value of stock buybacks, plain and simple, is to ensure that the profits of Apple are shared among a smaller pool of elites. Above Avalon carefully dodges the real question: since Apple started its stock buyback, what has the ROI been? Above Avalon asserts that there’s nothing else for Apple to do with its billions. I think otherwise. Spending tens of billions every year in order to save less than $3 billion in discretionary divident payments is foolish. It’s burning money. Apple could be expanding its product lineups and its distribution network and vertically integrate its manufacturing — all achieving much higher returns on investment. But that wouldn’t personally enrich the executives, would it? Those other wise uses of cash take time to recoup the initial investments, whereas Apple’s games with stock pay instantly.

          Apple has indeed achieved a level of cash flow so great that its executives can do anything they want and never have to worry about budgetary problems ever again. Alas, they are rapidly losing touch of the mainstream customer. They obviously have been focusing on short term profit instead of long term company health.

          In other words: If Apple has so much free cash, WHY is it so slow at product updates? Why does it hold its pricing dramatically above mainstream levels? Why are the advertisements for lesser known products and features completely missing?

          If Cookie is patriotic, why the extremely convoluted Wall Street loans designed only for tax avoidance? He doesn’t want to pay dividends to shareholders (except himself, of course), and he doesn’t want to support a (currently) criminally mismanaged government, but he is happy paying fees for profiteering Wall Street firms?

          Regardless of how wonderful the stock buyback may or may not be for the remaining large stockholders of AAPL, is time for new leadership at Apple.

  2. Steve Jobs certainly did not believe in a dividends but the context is that Apple needed the cash for investment in the business.
    Apple now makes more money that it can spend wisely on R&D and M&A. Of course it could buy overpriced companies like M$ has done but that would not add real value to the business.

    Personally I like dividends because I own shares. The dividends are reinvested and it provides a way to increase my holdings 1.5% annually. No tax (yet) because they are in my retirement fund.
    Note that dividends will result in the share price being lowered by the value of the dividend distribution.

    Buybacks are reducing the number of outstanding shares, which lowers the dividend cost and increases the value of the remaining shares.
    Note that buybacks do not require a share price adjustment like dividends do but instead typically cause the share price to increase. It can be argued that the money spent does not directly correlate with an increase in share price, i.e. is 250BB of Apple’s market share due to the share buyback? Hard to quantitate but probably has helped Apple stabilize share price during bear periods whilst capitalizing on a discounted purchase cost.

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