Daniel Eran Dilger for AppleInsider:
Since 2012, Apple has been buying back shares at the extraordinary rate of around $10 billion per quarter. A year ago it picked up the pace to around $20 billion per quarter. After a reprieve in the March quarter, the company has resumed its buyback frenzy with its largest-ever quarterly funding: $24 billion in the June quarter.
But why is Apple buying back shares seemingly regardless of their price? It appears clear that Apple expects its share price to grow much higher in the future. So rather than carefully timing its repurchases to only occur when the stock price hits its lowest levels, Apple continues to buy shares back nearly as fast as it can all the time, even as the stock price jumps up and down as it continues to increment higher.
Since 2012, Apple has now funded a total of $271.3 billion in stock buybacks. Most of these shares were repurchased at what would today be an incredible discount. While analysts have occasionally picked out a given trough in Apple’s stock price and declared that its buybacks were a huge mistake, it’s hard to imagine in hindsight how Apple could have better invested $271 billion of its past iPhone profits.
MacDailyNews Take: These are massive, unprecedented buybacks that continue to pay dividends (on top of actual dividends) to Apple shareholders. AAPL investors should be cheering for every share that’s retired!
i wish I understood the value of BuyBacks to the ordinary shareholder.
Who knows, maybe their goal is to eventually buy back all of their shares and make the company private. They will no longer have to pay dividends, nor pay attention to those pesky shareholders that demand quarterly profits. Dell once did that and went private. It is not unprecedented.
Dell is crap, and the shareholders lost in that deal, Michael Dell and the insiders however won big.
That is wrong. The current buyback is concentrating the number of active shares. The value of the company remains the same.
A buyout would mean apple needs to come up with 1T of independent cash. They can’t use shareholder money.
Can’t use shareholder money? So what have they been using? MasterCard?
It’s kind of about competition. Let’s say a company has 10 shares to it’s name, and you own one. Let’s say it is trading at $100 per share. If the company continues to do well the share price may go up to $150. But if the company buys up 5 of those shares and then it does well there will only be 5 shares to buy and the demand may make the price go up to $200, instead of just $150. The shares are more “rare” and “coveted”. If you just keep your one share the price goes up further than it would if there were a whole bunch of them in circulation and you didn’t have to do anything. Also, the fewer shares there are the less in dividend payments the company has to make. Like $0.77 on millions of shares vs. $0.77 on thousands of shares…or the company, since they are now saving money on dividends, because of the buybacks, may raise the dividend to $7 per share, so your one share will make you even more money. And, like ConfusedCountry said, it might make it so they have to put up with fewer sniveling stockholders. It’s a good thing…as long as the company keeps doing well. 🙂
If a company goes private do you HAVE to sell them your shares? Do they just become worthless if you don’t? That would be interesting.
.77 times 20,000 shares equals after tax nearly 4,000 per month, most American’s don’t make close to that amount after tax, and if you organize your life ie.. no debt (house or car) you would not need to work again and if lived in a single payer country well you git the picture….
Note Apple shouldn’t be buying back their stock just pay 1 to 1.25 a share dividend and call it a day.
1.25 x 20,000 equals about 5,415-6,250 per month after tax (25% to 35%), you want the money in your hands not Wall Street……
thans Bob
There is none, but Wall Street loves them…..
Instead of wasting money to make the rich richer, I wish they’d make their products more affordable or return the features they took away when they raised prices and made Apple products poorer in value. Example: removing the ports from Mac laptops, removing headphone jacks from iPhones, as well as the headphone adapter, plus using crappy keyboards.
Don’t be a dinosaur.
Bluelobe , please humor me with an honest reply to this question: do you vote R, D or I?
AAPL is down 5.6% in the trailing year. These stock buybacks have done NOTHING but piss money away. Money that Apple could have used to invest in the future. Money that could have made the Mac Pro worlds better. Years ago. Money that could have turned Aperture into software that would have wiped out Adobe’s Lightroom. Money that could have invested in keyboards that could last more than 3 months. Money that could have built an ecosystem of wireless networking equipment for the home, something we ALL have in our homes.
Tim Cook pissed all that money away and shareholders didnt get a dime. Not one dime of it.
Sh!tcan Tim Cook!
Share buybacks raise the value of outstanding shares. How much is executive compensation based on share price is the real question
You want the money in your pocket not Wall Street?????
It’s also a sign they feel their share price is undervalued. Buying back shares allows those shares to be sold again at a higher price point.
Wall Street con game, Money in your pocket not WS.
The shares they buy back are retired, not reissued. However, they do issue new shares for executive/employee compensation per their respective compensation plans which are publicly available. The rate of buybacks far exceeds the compensation shares.
I would like to see a slightly higher dividend after all these years.
With 24 billion $US, imagine how good the keyboards on Mac Laptops could be. Imagine how nice and svelte a modern 4″ iPhone could be. Imagine how user friendly and affordable a mid-range Mac tower would be. Imagine all the improvements Apple could make to Maps, Photos, and all the other mediocre freeware it offers. Imagine if its media was sold in high-resolution formats. Imagine if Apple got serious about the Smart Home by offering a new generation of kickass Airport products that JUST WORK. Imagine if Apple brought all its iCloud securely in house onto proprietary secure Mac Servers. Imagine if Apple sold a rock solid NAS for consumers so they could securely host their own data, securely accessible worldwide. Imagine if Apple phones had 50% more battery life and 32GB more data storage across the board for no increase in retail price. Imagine if Apple offered a stripped down slim Watch designed for athletes instead of medical geeks and fashion band afficianados. Imagine if Apple acquired production facilities in the USA and Europe and South America. Imagine if Apple worked with carmakers to make Carplay a bring-your-own-iPad proposition instead of allowing automakers to rape customers on pricing for low quality infotainment screens tacked onto the top of the dash. Imagine if Apple got serious about streamlining digital interfaces with a true push to end the dongle hell.
Imagine if Apple was about pleasing the end user instead of enriching executives and their wall street friends.
Cook’s Apple is not the Apple we all admired a decade ago, friends. Stock buybacks are just one symptom of a company that no longer cares about innovation like Apple’s first generations did.
I agree – well, mostly. I wish Jobs or someone like him was still running the company.