Apple buybacks to resume on Friday, gobbling up stock priced near the lowest of 2016

Posted:
in AAPL Investors
Apple's share repurchase program will exit a mandated quiet period on Friday--two days after the company reported earnings--enabling the company to resume buying back shares. Coincidentally, the company's shares were conveniently pushed down toward their lowest price of 2016 today.

Apple Buybacks Q2 2016
Source: Apple


Apple's shares took a beating following Tuesday's Q2 earnings release, falling from just over $104 to open at $96 on Wednesday.

Shares then remained relatively flat until this afternoon, when activist investor Carl Icahn volunteered comments on CNBC noting that he had sold of his shares in the company.

Those comments were made during Apple's quiet period, as well as within market hours, resulting in a plunge to nearly $94, very close to the lowest stock price nadir of 2016 seen in early February. Shares improved only slightly in after hours trading.

That leaves Apple's shares set up to open tomorrow at a big discount from their year-to-date highs above $110, just as the company is allowed to resume its buyback activity.

A year ago, Goldman Sachs portfolio strategist Amanda Sneider advised investors to take advantage of the buyback period following the earnings reports of companies with share repurchase plans, noting that stock prices are typically lower until buybacks are allowed to resume.

Apple spent $7 billion on buybacks in Q2



In Apple's fiscal Q2 March quarter, the company spent $7 billion on share buybacks at at average share price of $97.54, again taking advantage of dips in its share price. Those buybacks, as well as $33 billion in previous share buybacks over the previous five quarters all made at average share prices ranging from $109 to $128, all currently look like a poor investment, given the company's current share price and 20/20 hindsight.

However, the announcement of another $35 billion allocated for additional buybacks makes it clear that the company fully expects its shares to recover from current doldrums.

Some have questioned the wisdom of buybacks given that Apple's shares are currently trading below where they were in the summer of 2014--as well as being below their highest point back in 2012--suggesting that buybacks are not helping.

However, the long term outlook for Apple from investor analysts is overwhelmingly bullish, with a one year consensus target price of $120, according to nasdaq.com.

If Apple were actually facing a future of slow growth and an actual collapse of demand in China, rather than buying back its own stock it would be scrambling to acquire other companies with an actual, apparent strategy--the way Google has been almost blindly gobbling up its Alphabet soup over the past several years as Android has done little and every one of its hardware efforts have all imploded.

While Apple is also making acquisitions (albeit with a discernible strategy), its biggest ongoing acquisition over the past several years has been Apple itself, to the mind-blowing tune of $117 billion. That pace isn't expected to slow down. Instead, Apple says it expects to spend another $58 billion over the next two years.

This all happened before



Apple has regularly jumped to buy up billions of dollars worth of its shares during irrational market dips. Last October it was revealed that the company had spent $14 billion on share buybacks in fiscal Q4, after seeing its shares collapse by nearly a third in response to its Q3 earnings report.

AppleInsider had anticipated the move, due to the predictability of both traders to skittishly panic and for Apple to take advantage of their irrationality.

Back in January 2014, Apple's stock similarly nose-dived after an earnings release, resulting in a stock panic that shaved a (a split adjusted) $10 off of Apple's share price--conditions similar to today. The company responded by scrambling to spend an incredible $18 billion to take advantage of faithless investors' extreme gullibility on behalf of its loyal shareholders, although the bulk of those buybacks ($12 billion) were performed under an ASR rather than in open market orders.

Those actions paid off tremendously. Apple bought up over 30 million shares at prices below (a split adjusted) $75, right before the stock again returned to more rational prices.
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Comments

  • Reply 1 of 72
    "Convenient" is pretty positive spin on bad news for AAPL shareholders.
    edited April 2016 singularity
  • Reply 2 of 72
    ac1234ac1234 Posts: 138member
    More money WASTED by Cook - the buybacks have done nothing for shareholders or Apple - use that money to give us far larger dividends - not the pathetic 2% a year as it is now.
    jonlkseccnocbuibobschlob
  • Reply 3 of 72
    robin huberrobin huber Posts: 2,926member
    ac1234 said:
    More money WASTED by Cook - the buybacks have done nothing for shareholders or Apple - use that money to give us far larger dividends - not the pathetic 2% a year as it is now.
    I am a very long time share holder. I bought in because I believed in the company and wanted to support it in its dark days, not to make a killing. But make a killing I did. I have been rewarded many times over both in capital return AND great products I use. If they want to go private it's fine with me. As long as the company stays strong and the great products keep coming I've gotten what I wanted. Besides, it'll be nice not to have the Wall Street weenies always whining about the company, and day trading criminals trying to jack around the stock price to make a quick buck. 
    edited April 2016 genovellelondorbaconstangfochertdknoxfotoformattmaymike1brucemcpalomine
  • Reply 4 of 72
    correctionscorrections Posts: 1,142member
    ac1234 said:
    More money WASTED by Cook - the buybacks have done nothing for shareholders or Apple - use that money to give us far larger dividends - not the pathetic 2% a year as it is now.
    That's the point: at current stock prices, most of the buybacks last year were made at higher prices. However, Apple expects that to change, based on more information that you have available to yourself. Also, you can't say buybacks haven't helped the stock price because without them it likely would be even lower.
    londorai46baconstangtdknoxpscooter63mike1icoco3jony0
  • Reply 5 of 72
    tkell31tkell31 Posts: 214member

    ac1234 said:
    More money WASTED by Cook - the buybacks have done nothing for shareholders or Apple - use that money to give us far larger dividends - not the pathetic 2% a year as it is now.
    That's the point: at current stock prices, most of the buybacks last year were made at higher prices. However, Apple expects that to change, based on more information that you have available to yourself. Also, you can't say buybacks haven't helped the stock price because without them it likely would be even lower.
    You are really giving Cook and co a lot of credit.  How many YEARS did it take before they realized they need to build a phone with a bigger screen?  And do you really think they know what the Chinese govt will do?  They've propped up the stock price, but falling revenue will offset buybacks.  Ac is right.  A larger dividend would put in a better floor then buybacks.
    palomine
  • Reply 6 of 72
    correctionscorrections Posts: 1,142member
    tkell31 said:
    Seems like desperation, but Cook doesnt care he's more focused on LBGT issues, and of course he's sold every share he has ever owned.  Or another way to think of it is investors are counting on China and Cook.  Right.
    That's not true. Cook's shares in Apple are public record. He has tons of shares still to vest, and currently holds many more than you - close to a million last I checked. He has THE vested interest in Apple's stock price going up. But yes, OBVIOUSLY Apple's second largest market with the most growth potential is important.
    londorai46baconstangtdknoxmike1pscooter63jony0
  • Reply 7 of 72
    jonljonl Posts: 210member
    Such a waste of money. The stock is lower than it was in 2012. Guess that's not long enough to be an article. lol
  • Reply 8 of 72
    For the love of God. Icahn's gone we got an early Christmas present. Let's pray the stock hits $80 then Apple take your $600 billion and buy it back!!!  

    Take this company away from wall street so we never have to deal with this crash and burn they do to us on a daily basis. We announce great additions to current product and because it didn't make coffee and shoot out pixie dust they considered the upgrade a disaster.

    Take back Apple. Allow people who actually want to invest in a private company to do just that but the idea that they pay dividends to the people who hate  us along side the same people that support us drives me crazy. 

    Go private and return to focusing on creating NEW product again. Stop with all the PC (political correct) and gay issues and get back to work. Tim keeps saying he wants to 'leave it better than I found it do it through new ground breaking product we didn't know we needed like the iPhone and iPad.

    We don't need a CEO more concerned about some bathroom law in another state. Worry about what "the next big thing" will be the they way we got the iPhone, iPad, etc. I'm not going to do the "Steve was so much greater" rant, BUT he did make sure things got done and although this is a team effort I just would like to hear more about new products and less about what the stock is doing and which bathroom I get to use in the Carolina's. Sorry. Not very PC of me but enough is enough with all this green crap. Release a laptop the public would actually like to buy to replace our  now 5+year old 17" laptop. I'm in the music business. Ever tried remixing on a 12" laptop?  Lol please!
    edited April 2016 buzdotsRayz2016
  • Reply 9 of 72
    ac1234 said:
    More money WASTED by Cook - the buybacks have done nothing for shareholders or Apple - use that money to give us far larger dividends - not the pathetic 2% a year as it is now.
    If Apple was on the ropes and spending their last dimes on these buybacks you might have point, but they aren't. The buybacks are not even coming out of existing cash holdings and instead are being financed at a much more advantageous rate. You can argue all you would like about what Apple should be spending their money on, but this is not preventing them from doing anything, nor is it hurting. If you want the stock price to improve, the best thing you can do is stop complaining about it and buy more.
    edited April 2016 ai46tdknoxmike1pscooter63MacPro
  • Reply 10 of 72
    We all know as soon as any momentum builds in this stock either an analyst or some anonymous source will release a negative note and the stock will tank 3-5%.  Wall Street is doing all they can to lure more retail investors into this stock.  At the time the buyback and dividend was initiated in 2012 I think earnings were $6-$7 per share.  Earnings have grown 50% since then and on the heels of a $100 billion buyback and the stock is lower today than it was sept 2012?  Top that with the fact that piper has a $150 price target.  Carl Icahn said F-this.........
    tdknox
  • Reply 11 of 72
    focherfocher Posts: 583member
    jonl said:
    Such a waste of money. The stock is lower than it was in 2012. Guess that's not long enough to be an article. lol
    You should just shut your computer off because you simply don't know anything. The stock split in 2014. AAPL is very much worth more than it was in 2012. Since then, Apple has retired quite a bit of shares. It has also increased its cash position by almost $100B. Once again, people cannot distinguish between AAPL (the stock) and Apple (the company).
    edited April 2016 tdknoxpscooter63
  • Reply 12 of 72
    jonljonl Posts: 210member
    focher said:
    jonl said:
    Such a waste of money. The stock is lower than it was in 2012. Guess that's not long enough to be an article. lol
    You should just shut your computer off because you simply don't know anything. The stock split in 2014. AAPL is very much worth more than it was in 2012. Since then, Apple has retired quite a bit of shares. It has also increased its cash position by almost $100B. Once again, people cannot distinguish between AAPL (the stock) and Apple (the company).
    LOL. Are you so dimwitted so as not to be able to mentally adjust for the split, and don't you know what the stock price range was in 2012 off the top of your head, because I sure do. Pitiful, just pitiful, even for this board.

    radarthekatpalominebobschlob
  • Reply 13 of 72
    red oakred oak Posts: 576member
    How about adding the simple fact that Apple simply does not have any US cash left to do any meaningful share buybacks.  Anything material needs to be done via massive debt issuance 


    cnocbui
  • Reply 14 of 72
    red oakred oak Posts: 576member
    jonl said:
    focher said:
    You should just shut your computer off because you simply don't know anything. The stock split in 2014. AAPL is very much worth more than it was in 2012. Since then, Apple has retired quite a bit of shares. It has also increased its cash position by almost $100B. Once again, people cannot distinguish between AAPL (the stock) and Apple (the company).
    LOL. Are you so dimwitted so as not to be able to mentally adjust for the split, and don't you know what the stock price range was in 2012 off the top of your head, because I sure do. Pitiful, just pitiful, even for this board.

    The stock peaked at 705 back in 2012, the equivalent of $100.71 today.   The value of the company (aka market cap), taking into account the buybacks, is $100 billion less today than it was in 2012  

    The senior mgmt team has done an awful job managing the narrative of this company.  Awful  


    ksecjonlcnocbuipalomineyojimbo007
  • Reply 15 of 72
    red oak said:
    jonl said:
    LOL. Are you so dimwitted so as not to be able to mentally adjust for the split, and don't you know what the stock price range was in 2012 off the top of your head, because I sure do. Pitiful, just pitiful, even for this board.

    The stock peaked at 705 back in 2012, the equivalent of $100.71 today.   The value of the company (aka market cap), taking into account the buybacks, is $100 billion less today than it was in 2012  

    The senior mgmt team has done an awful job managing the narrative of this company.  Awful  


    The management team has put 13 years of extraordinary profits on the books and has obliterated almost every metric used to measure a company. If Wall Street can't figure out how to value the stock, that's not the fault of the management team. The $100 billion was not lost by Apple. It was lost by shareholders who invested in a massive company expecting unrealistic sustained growth when they should have been putting the focus on value. The company told everyone 3 months ago almost to the decimal place what yesterday's numbers would be. If you can't accept the company's guidance (which has yet to be adversely wrong) and randomly price the stock based on whatever some guy at BS Fund Company says then you deserve all the losses you suffer.
    edited April 2016 tdknoxRayz2016pscooter63am8449patchythepirateMacProyojimbo007macologist
  • Reply 16 of 72
    I'm still more concerned that for every $1 Apple has in a US-based bank, it has $20 in US cash-equivalents overseas.

    There are a few problems with this disclosure.
    1. Overseas money isn't called US Dollars.  They should be disclosed in Euros or whatever the bank that has the account counts its currency in.   I firmly believe the US Dollar sign is reserved for dollars that can be spent in the US.  Repatriation of those funds (and paying appropriate repatriation taxes) is a requisite requirement to counting those as spendable US dollars unless your in the illegal drug trade...  Just sayin'.   Subtract ~35% from anything held overseas.  Call it "Timmy Dollars" or something adorable and cute; but it just isn't US Dollars. 
    2. There's also no date on this page which indicates when Apple used the cash-conversion table from the Wallstreet Journal. 
    edited April 2016
  • Reply 17 of 72
    red oakred oak Posts: 576member
    red oak said:
    The stock peaked at 705 back in 2012, the equivalent of $100.71 today.   The value of the company (aka market cap), taking into account the buybacks, is $100 billion less today than it was in 2012  

    The senior mgmt team has done an awful job managing the narrative of this company.  Awful  


    The management team has put 13 years of extraordinary profits on the books and has obliterated almost every metric used to measure a company. If Wall Street can't figure out how to value the stock, that's not the fault of the management team. The $100 billion was not lost by Apple. It was lost by shareholders who invested in a massive company expecting unrealistic sustained growth when they should have been putting the focus on value. The company told everyone 3 months ago almost to the decimal place what yesterday's numbers would be. If you can't accept the company's guidance (which has yet to be adversely wrong) and randomly price the stock based on whatever some guy at BS Fund Company says then you deserve all the losses you suffer.
    Apple's PE of 10 is a direct result of the management's inability to tell its story and inspire confidence.   It is ridiculous that it has taken a slow down in iPhone units for it to start touting it's Services business.  They should have started this three years ago 

    Awful 
    edited April 2016 SpamSandwichpalomine
  • Reply 18 of 72
    NY1822NY1822 Posts: 266member
    sometimes I wonder if people actually realize what buying back shares does for Apple:
    It retires the dividend payment, now, and as it grows in the future:

    http://www.fool.com/investing/general/2015/12/20/how-apple-incs-debt-powered-repurchase-strategy-ac.aspx

    If shares are trading around $110, for example, and Apple is paying 1.3% in interest to repurchase those shares, it is effectively paying $1.43 per share to retire those shares. But right now Apple pays a total of $2.08 per share in dividends, so it realizes a net savings of $0.65 per share, in this example. Paying $1.43 to save $2.08 already sounds like a pretty good deal, but it actually gets even better from there. Interest expense is tax deductible, whereas dividend expenses are not, so Apple's after-tax savings are even greater.

    Over the past fiscal year alone, Apple has retired 289 million shares outstanding, so you can see how quickly all those dividend savings add up, even if Apple does incur interest expense in order to do so. You can also see these savings manifest in the cash flow statement. Apple boosted its dividend payout by 8% in 2014 and another 11% in 2015 (these increases take effect halfway through the fiscal year), but total dividend expense increased by merely 4% in fiscal 2015 to $11.6 billion.

    edited April 2016 brucemcpscooter63patchythepiratemacologist
  • Reply 19 of 72
    red oak said:
    The stock peaked at 705 back in 2012, the equivalent of $100.71 today.   The value of the company (aka market cap), taking into account the buybacks, is $100 billion less today than it was in 2012  


    The senior mgmt team has done an awful job managing the narrative of this company.  Awful  


    When Steve Jobs died Oct. 5, 2011, the stock was trading @ $58
    The stock skyrocketed for the next year peaking at $100 on Sept. 17, 2012.
    Then AAPL went into a free-fall to $55 a share.
    It took Apple 2 full years for the stock to reach $100 again...Sept. 2014.
    Apple peaked at $132 May 18, 2015
    AAPL at today's market close is actually higher than it was on Feb. 2.
    Had you invested $1000 in Apple 5 years ago, it would be worth $1800 today.
    Had you invested $1000 in Apple 1 year ago, it would be worth $750.

    I have this cool app on my iPad that gives me all of this data, its called Stock Master.

    *All prices are adjusted for stock splits.

    icoco3patchythepirate
  • Reply 20 of 72
    red oak said:
    The stock peaked at 705 back in 2012, the equivalent of $100.71 today.   The value of the company (aka market cap), taking into account the buybacks, is $100 billion less today than it was in 2012  

    The senior mgmt team has done an awful job managing the narrative of this company.  Awful  


    The management team has put 13 years of extraordinary profits on the books and has obliterated almost every metric used to measure a company. If Wall Street can't figure out how to value the stock, that's not the fault of the management team. The $100 billion was not lost by Apple. It was lost by shareholders who invested in a massive company expecting unrealistic sustained growth when they should have been putting the focus on value. The company told everyone 3 months ago almost to the decimal place what yesterday's numbers would be. If you can't accept the company's guidance (which has yet to be adversely wrong) and randomly price the stock based on whatever some guy at BS Fund Company says then you deserve all the losses you suffer.

    Apple often provides guidance which is "interesting".   So that said, I am looking for the link to the published earnings report.  If history is my guide, Apple's earnings report is likely again "un-audited".  So to me, I'm not very surprised when they're almost always able to hit their guidance when its figures are of the un-audited type.  

    So there's two things.  First, I need to see the published SEC report and see which firm audited the numbers this quarter.  Secondly, if they actually are audited, it seems that Apple customers really, really, really predictable, and Apple's finance team is more accurate than the weatherman.   To get to that point, it'd almost be like customers are programmed... Or Lemmings...  That may lead into questions about disposable products, planned obsolescence.
    edited April 2016
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