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Apple spent $16 billion last quarter to repurchase 36 million shares

post #1 of 62
Thread Starter 
Apple's massive share buyback program was in full swing in the June quarter, when the company spent $16 billion on itself ??enough to buy rival BlackBerry three times over.

Apple


The original schedule called for Apple to repurchase 10 million shares in its third fiscal quarter of 2013, Philip Elmer-Dewitt of Fortune 2.0 noted on Thursday. But with shares of Apple trading well below where they were a year prior, Apple instead apparently decided to push hard and buy 36 million shares.

Of the $16 billion Apple spent, $12 billion came out of the company's accelerated share repurchase program, and the remaining $4 billion were shares bought on the open market. The average price paid was $444.44.

That average share price was nearly $200 off from the company's high of $636.23 seen a year prior, during the June quarter of 2012. Apple's all-time high came last September, when iPhone 5 hype pushed shares to $702.10.

The amount spent by Apple on its own stock in one quarter exceeded the $12.5 billion Google paid to acquire Motorola Mobility. It also topped the market values of handset makers Nokia ($14.89 billion) and BlackBerry ($4.64 billion), panel manufacturers LG Display ($8.93 billion) and Sharp Corp. ($5.07 billion), as well as content providers Netflix ($13.55 billion) and Barnes & Noble ($1.06 billion).

Apple announced its massive $100 billion capital return program, the largest of its kind in history, in April. The plan runs through 2015 and includes $60 billion in authorized share repurchases, as well as an increase of Apple's quarterly dividend by 15 percent.

By spending $16 billion in the June quarter, Apple still has some $44 billion left to invest in itself over the next two and a half years.
post #2 of 62
So that's the reason why total profit was lover this quarter !
post #3 of 62
Quote:
Originally Posted by jusephe View Post

So that's the reason why total profit was lover this quarter !

No.

post #4 of 62

Good timing, if they know they are coming up with a great line up, its a good idea to be very agressive while the sotck price is low.

 

They destroy about 3.5% of the shares, so EPS was 3.5% higher than without the buyback. So we got 7.47 EPS instead of 7.20 EPS.  The difference between a beat and a miss.

 

When Apple is done, we will have gone from around 1 billions shares to around 850 millions shares.


Edited by herbapou - 7/25/13 at 6:09am
post #5 of 62

Why do the companies buyback shares?

post #6 of 62
Quote:
Originally Posted by herbapou View Post

Good timing, if they know they are coming up with a great line up, its a good idea to be very agressive while the sotck price is low.

 

They destroy about 3.5% of the shares, so EPS was 3.5% higher than without the buyback. So we got 7.47 EPS instead of 7.20 EPS.  The difference between a beat and a miss.

No.

post #7 of 62
Excellent. Hope they maintain the pace.
post #8 of 62
Quote:
Originally Posted by Chandra69 View Post

Why do the companies buyback shares?

Do you want to commonly accepted reason or the real reason?

post #9 of 62
Quote:
Originally Posted by Chandra69 View Post

Why do the companies buyback shares?

For a handful of reasons, some good, some dubious. The good ones include: (1) putting your money where your mouth is, thereby credibly signaling to the market that your stock is undervalued, since you think your own stock is a great investment even if the market does not; (2) buying stocks 'low' to keep as treasury stock for future employee option exercises, so as to mitigate future dilution for existing shareholders; (3) returning money in a tax-efficient way to investors; (4) doing an equity-for-debt swap to make a capital structure change -- i.e., take on debt to buy back shares.

The dubious ones include: (1) trying to boost reported EPS with the expectation that will enhance market value; (2) greenmail (i.e., targeted repurchases, like Yahoo did with Loeb a couple of days ago); (3) attempting to take shares out of circulation to minimize chances of being taken over.
post #10 of 62

$444 per share is a bit high. I thought Apple moved when the stock slipping below $400.

post #11 of 62
Quote:
Originally Posted by anantksundaram View Post


For a handful of reasons, some good, some dubious. The good ones include: (1) putting your money where your mouth is, thereby credibly signaling to the market that your stock is undervalued, since you think your own stock is a great investment even if the market does not; (2) buying stocks 'low' to keep as treasury stock for future employee option exercises, so as to mitigate future dilution for existing shareholders; (3) returning money in a tax-efficient way to investors; (4) doing an equity-for-debt swap to make a capital structure change -- i.e., take on debt to buy back shares.

The dubious ones include: (1) trying to boost reported EPS with the expectation that will enhance market value; (2) greenmail (i.e., targeted repurchases, like Yahoo did with Loeb a couple of days ago); (3) attempting to take shares out of circulation to minimize chances of being taken over.

Why is dubious (3) more dubious than good (3)?

post #12 of 62

I dont understand how they could have increase the cash hoard. 

 

Quote:

“We generated $7.8 billion in cash flow from operations during the quarter, and are pleased to have returned $18.8 billion in cash to shareholders through dividends and share repurchases,” said Peter Oppenheimer,

 

Then how did they increase the Cash Hoard by 1.9 millions from last quarter? Borrowed money from the bonds?

 

LEAD Technologies Inc. V1.01

post #13 of 62
Quote:
Originally Posted by ankleskater View Post

Do you want to commonly accepted reason or the real reason?

They're taking themselves private! 1wink.gif

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #14 of 62
Quote:
Originally Posted by matrix07 View Post

$444 per share is a bit high. I thought Apple moved when the stock slipping below $400.

I think that share buybacks are spread out. They don't decide to suddenly buy back all of the shares in one day.
post #15 of 62
$444 is high, given the average stock price since they started the program

I was hoping they backed up the truck when it was under $400

I would describe this as a misfire on their part

Windows survivor - after a long, epic and painful struggle. Very long AAPL

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Windows survivor - after a long, epic and painful struggle. Very long AAPL

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post #16 of 62
Quote:
Originally Posted by Red Oak View Post

$444 is high, given the average stock price since they started the program

I was hoping they backed up the truck when it was under $400

I would describe this as a misfire on their part

I would say, not at all.

post #17 of 62
Quote:
Originally Posted by Tallest Skil View Post


They're taking themselves private! 1wink.gif

You just had to give away the real reason, didn't you?

post #18 of 62
Quote:
Originally Posted by Red Oak View Post

$444 is high, given the average stock price since they started the program

I was hoping they backed up the truck when it was under $400

I would describe this as a misfire on their part

I rather think a company intelligent enough to earn 140 BILLION DOLLARS IN CASH knows how to then use that money. 1oyvey.gif
Quote:
Originally Posted by ankleskater View Post

You just had to give away the real reason, didn't you?

It was more dramatic that way.

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply
post #19 of 62
Quote:
Originally Posted by matrix07 View Post

$444 per share is a bit high. I thought Apple moved when the stock slipping below $400.

 

 

Quote:

Originally Posted by Red Oak View Post

$444 is high, given the average stock price since they started the program

I was hoping they backed up the truck when it was under $400

I would describe this as a misfire on their part

The stock price was only under $400 for like 3 days in April and 3 days in June. Most of the rest of the quarter it was between around the 410s to 450s. It's also doubtful they could purchase $16 billion worth of shares in such tiny windows since there is simply just not that much volume being traded in a day. And even if they could, you do realize at $400 a share that would be around 40 million shares or nearly quadruple their daily volume, right? Even over a three day period that would drive the price through the roof with such a huge swing in volume. Then you armchair CEOs would be whining even more. They basically stagger purchased throughout the quarter which is a perfectly smart thing to do without causing huge volatility swings.


Edited by MikeJones - 7/25/13 at 7:11am
post #20 of 62
Quote:
Originally Posted by Tallest Skil View Post

I rather think a company intelligent enough to earn 140 BILLION DOLLARS IN CASH knows how to then use that money. 1oyvey.gif

Nuh uh! These armchair CEOs that have never run a business, let alone a massively profitable multinational business, in their life are clearly more competent than Tim Cook! If Apple's BoD was smart they'd install Red Oak and matrix07 as the co-CEOs of the company. Apple's stock would then be up to a billion dollars per share in no time! /s

post #21 of 62
Apple going private should be an superb fantasy for many of us here.

IPO: Known as prostitution, or publicly exposing yourself, by any other definition.

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Apple Products: So good that their ‘faulty' products outsell competitor’s faultless ones...
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post #22 of 62

I know it's just a fantasy, but it would be so cool if Apple could buy all the shares, go private, forget about the scum infested "market" at all, and leave Wall street behind.  

post #23 of 62
Quote:
Originally Posted by MikeJones View Post

Nuh uh! These armchair CEOs that have never run a business, let alone a massively profitable multinational business, in their life are clearly more competent than Tim Cook! If Apple's BoD was smart they'd install Red Oak and matrix07 as the co-CEOs of the company. Apple's stock would then be up to a billion dollars per share in no time! /s

Hey, I run my own business. Thanks for asking.
post #24 of 62
Quote:
Originally Posted by matrix07 View Post


Hey, I run my own business. Thanks for asking.

Lemonade stand? Paperboy route? Anything remotely like a multinational Fortune 100 company?

post #25 of 62
Quote:
Originally Posted by matrix07 View Post

Hey, I run my own business. Thanks for asking.

Business must be quiet.

You spend a lot of time on the forums...

1wink.gif
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post #26 of 62
Quote:
Originally Posted by MikeJones View Post

Lemonade stand? Paperboy route? Anything remotely like a multinational Fortune 100 company?

Nope. Nothing close to lemonade stand either. Nice try though.
post #27 of 62
Quote:
Originally Posted by MikeJones View Post

Lemonade stand? Paperboy route? Anything remotely like a multinational Fortune 100 company?

 

Quote:
Originally Posted by GTR View Post


Business must be quiet.

You spend a lot of time on the forums...

1wink.gif

Very nice, guys. Are you unemployed since you two spend a lot of time here as well?

 

Ever heard of "if you have nothing good to say ..."

post #28 of 62
Quote:
Originally Posted by GTR View Post

Business must be quiet.

You spend a lot of time on the forums...

1wink.gif

Hey. Hey. We always have time for something we like, don't we all? 1smile.gif
post #29 of 62
Quote:
Originally Posted by ankleskater View Post

Quote:
Originally Posted by anantksundaram View Post


For a handful of reasons, some good, some dubious. The good ones include: (1) putting your money where your mouth is, thereby credibly signaling to the market that your stock is undervalued, since you think your own stock is a great investment even if the market does not; (2) buying stocks 'low' to keep as treasury stock for future employee option exercises, so as to mitigate future dilution for existing shareholders; (3) returning money in a tax-efficient way to investors; (4) doing an equity-for-debt swap to make a capital structure change -- i.e., take on debt to buy back shares.

The dubious ones include: (1) trying to boost reported EPS with the expectation that will enhance market value; (2) greenmail (i.e., targeted repurchases, like Yahoo did with Loeb a couple of days ago); (3) attempting to take shares out of circulation to minimize chances of being taken over.

Why is dubious (3) more dubious than good (3)?

It depends on whether you believe maximizing shareholder value is a good thing or not. 'good (3)' does, 'dubious (3)' does not.

 

In my view, anything that does not is dubious.


Edited by anantksundaram - 7/25/13 at 8:09am
post #30 of 62
Quote:
Originally Posted by StruckPaper View Post

 

Very nice, guys. Are you unemployed since you two spend a lot of time here as well?

 

Ever heard of "if you have nothing good to say ..."

I spend a lot of time here? You can look through my history to see that on most days I do post I don't post on the forums more than a handful of times. Many days, not even at all.

post #31 of 62
Quote:
Originally Posted by GTR View Post


Business must be quiet.

You spend a lot of time on the forums...

1wink.gif

 

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post #32 of 62
Good job apple , it is the wise way to use the money .
post #33 of 62
Quote:
Originally Posted by herbapou View Post

Then how did they increase the Cash Hoard by 1.9 millions from last quarter? Borrowed money from the bonds?

 

LEAD Technologies Inc. V1.01

You got it.

 

Apple issued $17B in new debt last quarter (and spent about the same amount returning money to shareholders).

post #34 of 62
Quote:
Originally Posted by Gazoobee View Post

I know it's just a fantasy, but it would be so cool if Apple could buy all the shares, go private, forget about the scum infested "market" at all, and leave Wall street behind.  

But I like my dividends! 1hmm.gif
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From Apple ][ - to new Mac Pro I've used them all.
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post #35 of 62
Kind of a shame they didn't have a plan in place to buyback massive numbers of shares in case of a market collapse. They may get another chance...

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #36 of 62
On the concall, TC discussed that since the buyback program unfolds
over time, the average re-purchase price would be reported at
the program's end, as if it were executed by "dollar cost averaging".
Perhaps this has gone out of style, but can't Apple's Braeburn subsidiary
use "zero-cost collar" options to hedge share retirement at a fixed price,
similar to foreign currency hedging? This would only make sense if
the option premiums are reasonable, and if the 400ish price is about
as low as AAPL gets for a couple of years. A disadvantage might be
that it could be harder to "tune" a buyback to boost a quarterly EPS estimate.
post #37 of 62
How does one take itself private though? Would Apple goes to the bank and take on hundreds of Billion of debt, then knocking on most of those >5% institution. And buy the rest from Open Market?

Assuming that is even possible ( Apart from government i dont know if Banks even have have that many billions to lend out ) , Who would be the actual owner of Apple then?
post #38 of 62
Quote:
Originally Posted by retiarius View Post

On the concall, TC discussed that since the buyback program unfolds
over time, the average re-purchase price would be reported at
the program's end, as if it were executed by "dollar cost averaging".
Perhaps this has gone out of style, but can't Apple's Braeburn subsidiary
use "zero-cost collar" options to hedge share retirement at a fixed price,
similar to foreign currency hedging? This would only make sense if
the option premiums are reasonable
, and if the 400ish price is about
as low as AAPL gets for a couple of years. A disadvantage might be
that it could be harder to "tune" a buyback to boost a quarterly EPS estimate.

The expected value of the difference between this strategy and the straight buyback is zero if options are fairly priced. It is difficult to believe -- in such a liquid, widely-held stock such as AAPL -- that they are not.

 

Why would you think option premiums would be mispriced (in Apple's favor)!?

post #39 of 62
Quote:
Originally Posted by anantksundaram View Post

In my view, anything that does not is dubious.

 

 

That I agree with. 

post #40 of 62
Quote:
Originally Posted by Tallest Skil View Post


They're taking themselves private! 1wink.gif

 

 

I dont buy that.  But I can see how this is interesting on a "conspiracy theory" level.

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