Originally Posted by jragosta
Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.
I am not pretending anything, and I most certainly am paying attention.
What I did was give a thought experiment about the standard share repurchase
in a theoretical company- one with no revenue to make the point clear - , a reply to your claim that a buying X% of stock always increases the stock by X% in any company.
Here is your original quote.If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
Thats what I was responding to, because it is wrong
. The supposed 10% increase should in theory be balanced by the drop in cash value, any actual increase depends on market sentiment.
Moving onto the fact that Apple are issuing shares to employees is to change the goalposts.