doggone said: I am sure they are buying bucket loads now to take advantage of the relatively low price. . .
Over the last few years Apple has retired about a third of its outstanding stock. . . That is good news for long term holders of the stock and must have had some impact on the stock price (since 2013 AAPL is up 230%)
Over the last five years Google is up over 200%. Amazon is up roughly 500%. Microsoft is up about 300%. AFAICT there's no evidence that Apple's stock repurchase and burn program has substantially affected the stock price.
doggone said: I am sure they are buying bucket loads now to take advantage of the relatively low price. . .
Over the last few years Apple has retired about a third of its outstanding stock. . . That is good news for long term holders of the stock and must have had some impact on the stock price (since 2013 AAPL is up 230%)
Over the last five years Google is up over 200%. Amazon is up roughly 500%. Microsoft is up about 300%. AFAICT there's no evidence that Apple's stock repurchase and burn program has substantially affected the stock price.
Was Apple's buyback ever intended to raise share price directly, or is the primary intent to just to reduce their free cash by funding dividend increases with it?
"When gauging the magnitude of the upcoming quarterly cash dividend increase, a 10% increase likely represents a floor. There are two reasons behind such an assertion:
Dividend strategy. Apple follows a stable dividend policy characterized by a steady dividend payout that reflects its long-term earnings potential. Instead of dividends closely following near-term earnings swings, the two variables align when looking at long-term trends.
Apple’s share buyback pace. As Apple buys back shares, the company pays out less in the way of cash dividends. This is made possible because repurchased shares are retired, reducing the number of outstanding shares. For every 100 million shares that Apple repurchases, the company saves approximately $300 million on cash dividends per year. Since reinstating the dividend, the amount of cash that Apple has spent on dividends has increased by 30% while the quarterly cash dividend has increased by 92%. As long as Apple continues to buy back significant amounts of stock, the company will be able to increase the quarterly cash dividend by 10% and not actually incur additional dividend expense."
This market was long over due for a correction, I don't think a threat from Covid-19 has much to do with it. Personally I think we had too many bubbles this cycle, Tesla, Beyond Meat, Virgin Galactic.
I think Apple's buy backs are pre-planned and can't take advantage of dips like this and any good timing or bad timing is just averaged out.
You are generally correct but in Jan-Feb. 2019 when AAPL stock dipped to <$150 range, Apple directors authorized a one-time expansion of their buy back program to take advantage of the exceptionally low dip the price had fallen to. It is detailed in the 2019 fiscal Q2 quarterly 10K report.
i would not at all be surprised if the price dropped low enough, say >30-35% (around 210-227, which incidentally was around late 2018’s previous all time high), that Apple would consider another one time expanded stock buy back. Of course, the timing would depend a lot on how the virus fight is shaping up. Apple has the benefit of time and a lot of cash in hand to wait it out.
This market was long over due for a correction, I don't think a threat from Covid-19 has much to do with it. Personally I think we had too many bubbles this cycle, Tesla, Beyond Meat, Virgin Galactic.
I think Apple's buy backs are pre-planned and can't take advantage of dips like this and any good timing or bad timing is just averaged out.
You are generally correct but in Jan-Feb. 2019 when AAPL stock dipped to <$150 range, Apple directors authorized a one-time expansion of their buy back program to take advantage of the exceptionally low dip the price had fallen to. It is detailed in the 2019 fiscal Q2 quarterly 10K report.
i would not at all be surprised if the price dropped low enough, say >30-35% (around 210-227, which incidentally was around late 2018’s previous all time high), that Apple would consider another one time expanded stock buy back. Of course, the timing would depend a lot on how the virus fight is shaping up. Apple has the benefit of time and a lot of cash in hand to wait it out.
Apple and the other major tech companies, also has the alternative, if the economy gets really bad, of buying up smaller companies that might not have the cash to survive a recession.
Would have been good to sell a week ago and buy now. The bad part of this is Apple will now see no reason to increase dividends by more tha 5%. Oh well. I'm vacationing in Europe for the next three months. Ignore everything and eat out in Lisbon with €8 1/2 bottles of wine for a snack in the afternoon.
Although it may have been a good idea at the time, I suggest you consider rethinking any international travel, especially to Europe. In 3 months or less, you may find travel restricted, areas closed, Covid spreading, and repatriation difficult. Plus healthcare and public health management less than ideal. Take care while you are there, bring your own supplies of masks.
This market was long over due for a correction, I don't think a threat from Covid-19 has much to do with it. Personally I think we had too many bubbles this cycle, Tesla, Beyond Meat, Virgin Galactic.
I think Apple's buy backs are pre-planned and can't take advantage of dips like this and any good timing or bad timing is just averaged out.
You are generally correct but in Jan-Feb. 2019 when AAPL stock dipped to <$150 range, Apple directors authorized a one-time expansion of their buy back program to take advantage of the exceptionally low dip the price had fallen to. It is detailed in the 2019 fiscal Q2 quarterly 10K report.
i would not at all be surprised if the price dropped low enough, say >30-35% (around 210-227, which incidentally was around late 2018’s previous all time high), that Apple would consider another one time expanded stock buy back. Of course, the timing would depend a lot on how the virus fight is shaping up. Apple has the benefit of time and a lot of cash in hand to wait it out.
It was in April 2019 when Apple's Board authorized an expansion of its buyback program, from $100 billion to $175 billion.
Apple will surely expand its buyback program again, likely in the third fiscal quarter. It does that every year regardless of stock price. As the previous authorization gets close to being used up, Apple expands it (or authorizes a new program) in April or May. As of the end of the first fiscal quarter, Apple had $59 billion in remaining authorization. At the end of the second fiscal quarter Apple typically has $10-25 billion left on its authorization (though last year it had $39 billion) and that's when it increases the authorization.
BTW, a lot of bad information in this thread today, along with a spattering of good information. DED’s article has the basics right on buybacks: Just like every other investor, Apple automatically gets more bang per buck when the share price drops.
Regarding buybacks, I made this comment on ped30.com a few days ago:
Below are some interesting numbers that I just calculated out of my master spreadsheet. They may seen unconnected, but I see a very deep and meaningful connection:
0.65 B 0.34 B 0.28 B 0.25 B 0.38 B 0.38 B
[These are] the approximate numbers of shares Apple has bought per fiscal year since they started their buybacks. Note that the first fiscal year, fy ‘14, was by far the biggest buyback. Also, note the major jump commencing in fy ‘18. The reason for that jump, simply put, was the repatriation of foreign-generated cash.
I submit that, with the pullback in stock prices, Apple’s buyback power is going to be supercharged. And the further the pullback, the more supercharged it’s going to be.
I’d further submit that few if any other companies in the world will be able to match Apple’s supercharger capacity and will to supercharge. Consequently, I view ANY economic slowdown short of a major world war as beneficial to long-term Apple shareholders.
Edit: For those who don’t understand the profound positive impact this has for long term stockholders, consider that buybacks in fact increase the percentage ownership of Apple for each remaining share. Thus, if you hold shares from before buybacks began, then when Apple buys back half it’s float, each share you still own will be worth twice the percentage ownership of Apple the company. Note that Apple has grown since buybacks started, so you effectively will own twice the shares in a larger, more profitable company. And furthermore, you didn’t have to pay any additional taxes to “acquire” those shares!
For my wife and I, being retired and elderly, Apple is essentially investing for us when our investing days are over. Pretty sweet!
The fiscal year numbers that Apple reports are:
2013 - 0.33 B 2014 - 0.49 B 2015 - 0.33 B 2016 - 0.28 B 2017 - 0.25 B 2018 - 0.41 B 2019 - 0.35 B
My numbers are slightly different because I count share purchases made through ASR agreements in the quarter (or year) in which they are paid-for. Apple appears to count them in the quarter (or year) in which they are delivered.
Apple seems to act like a national bank, buying its currency to keep devaluation low. I think this situation shows that it is not wise to be dependent on one area and country for your products. A company like Tesla is doing it the modern way, positioning its production in several distinct areas in the words (the U.S.A. being one of them) to combat all sorts of problems concerning one area. I would adapt Apples policy regarding this immediately and start building factories on US soil immediately, using the 100 billion or so for this years share buybacks that are effectively the same as burning the money. Apple should think big again, maybe look at Tesla what that means.
Apple has been doing this longer and better than $TSLA. This strategy is long-term, decades out.
DED, you sure do bring out the crazies.
TSLA just started, better makes no sense now.
TSLA was founded in 2003; "just started" isn't accurate, nor was it founded by Elon. More to the point, TSLA hasn't had a profitable year yet.
"Jan 29, 2020 - Tesla, which has never had a profitable year, ended 2019 with a loss of $862 million, less than its two previous annual losses. Revenue was $7.4 billion in the fourth quarter, the company said, up from $6.3 billion in the third quarter."
Given that there are large, profitable Automobile manufacturers, do you really think that Tesla is going to be profitable this year, competing against many more EV models in the market, in a year when car sales are in a recession, and with fewer government incentives?
Teslas future doesn't depend on my opinion. I know of people (in the 1950’s) thinking the transistor wouldn't succeed and tubes would always be everything.
Note that “Tesla just started” means something else than you make of it. Also they did just start mass producing electric cars, so very relevant. Also, I did nowhere mention Musk started TESLA (irrelevant btw.)
Apple's buybacks over the last 8 years, considered in the aggregate, are looking like one of the greatest financial maneuvers of all time. It has created tremendous additional wealth for shareholders who held on to their positions, in addition to the wealth created for those shareholders by the company's normal operations.
Apple has now bought back about 2.6 billion shares at a total cost of about $359 billion and an average share price of just under $138. The effective cost of the buybacks - taking into account lost net interest income and dividend savings - is about the same, perhaps a little less. (My estimates put it at about $354 billion.) In order for Apple's share price to be the same as it is now, with those 2.6 billion additional shares still outstanding, Apple's market cap would have to be more than $1.1 trillion higher than it currently is - at over $3 trillion - with that $354-ish billion still being on Apple's books as the reason for the higher market cap. That's not plausible. Apple is, effectively, more than $780 billion ahead on its buybacks.
(Of course, we could always say that Apple would have done better to do something else with the money - maybe by Tesla or invest more in nano technology. But such counter-factuals are hard to assess. The comparison to just having held on to the money is a pretty straightforward one.)
Apple's average annual return on the money it has spent buying back shares is now about 40%. That's weighting the money spent by how long ago it was spent. If we look at Apple's more recent buybacks, the annual return rate is even greater. It's incredible. If Apple had spent its extra cash to buy shares of other companies, and saw the rate of return it has with this large an amount spent, I think most would agree it had done remarkably well. And, of course, it could reissue shares any time it wants and sell them - at a huge gain. It could sell shares at one third the current share price and still come out ahead - with more money available to spend on whatever than it would have had had it not done the buybacks.
More than anything, at least speaking generally, share buybacks tend to concentrate future share price moves. And in Apple's case, those future share price moves have been on the whole quite positive. And Apple had a lot of money to spend to concentrate those positive share price moves a lot. Without having spent a single additional dime of their own, shareholders who have been along for the whole ride have accumulated about 61% more ownership in Apple - and its future earnings - than they would have had if Apple had not done the buybacks.
Apple's buybacks over the last 8 years, considered in the aggregate, are looking like one of the greatest financial maneuvers of all time. It has created tremendous additional wealth for shareholders who held on to their positions, in addition to the wealth created for those shareholders by the company's normal operations.
Apple has now bought back about 2.6 billion shares at a total cost of about $359 billion and an average share price of just under $138. The effective cost of the buybacks - taking into account lost net interest income and dividend savings - is about the same, perhaps a little less. (My estimates put it at about $354 billion.) In order for Apple's share price to be the same as it is now, with those 2.6 billion additional shares still outstanding, Apple's market cap would have to be more than $1.1 trillion higher than it currently is - at over $3 trillion - with that $354-ish billion still being on Apple's books as the reason for the higher market cap. That's not plausible. Apple is, effectively, more than $780 billion ahead on its buybacks.
(Of course, we could always say that Apple would have done better to do something else with the money - maybe by Tesla or invest more in nano technology. But such counter-factuals are hard to assess. The comparison to just having held on to the money is a pretty straightforward one.)
Apple's average annual return on the money it has spent buying back shares is now about 40%. That's weighting the money spent by how long ago it was spent. If we look at Apple's more recent buybacks, the annual return rate is even greater. It's incredible. If Apple had spent its extra cash to buy shares of other companies, and saw the rate of return it has with this large an amount spent, I think most would agree it had done remarkably well. And, of course, it could reissue shares any time it wants and sell them - at a huge gain. It could sell shares at one third the current share price and still come out ahead - with more money available to spend on whatever than it would have had had it not done the buybacks.
More than anything, at least speaking generally, share buybacks tend to concentrate future share price moves. And in Apple's case, those future share price moves have been on the whole quite positive. And Apple had a lot of money to spend to concentrate those positive share price moves a lot. Without having spent a single additional dime of their own, shareholders who have been along for the whole ride have accumulated about 61% more ownership in Apple - and its future earnings - than they would have had if Apple had not done the buybacks.
I just don’t like buybacks. The best way to grow the company is to... grow the company. And I especially don’t like them wasting vast sums of money on 1 or 2 movies as they have been doing (to the tune of hundreds of millions of dollars!).
IMO, a better use of those billions would be investing in more stuff like their own silicon, RAM, batteries and engineers.
Apple's buybacks over the last 8 years, considered in the aggregate, are looking like one of the greatest financial maneuvers of all time. It has created tremendous additional wealth for shareholders who held on to their positions, in addition to the wealth created for those shareholders by the company's normal operations.
Apple has now bought back about 2.6 billion shares at a total cost of about $359 billion and an average share price of just under $138. The effective cost of the buybacks - taking into account lost net interest income and dividend savings - is about the same, perhaps a little less. (My estimates put it at about $354 billion.) In order for Apple's share price to be the same as it is now, with those 2.6 billion additional shares still outstanding, Apple's market cap would have to be more than $1.1 trillion higher than it currently is - at over $3 trillion - with that $354-ish billion still being on Apple's books as the reason for the higher market cap. That's not plausible. Apple is, effectively, more than $780 billion ahead on its buybacks.
(Of course, we could always say that Apple would have done better to do something else with the money - maybe by Tesla or invest more in nano technology. But such counter-factuals are hard to assess. The comparison to just having held on to the money is a pretty straightforward one.)
Apple's average annual return on the money it has spent buying back shares is now about 40%. That's weighting the money spent by how long ago it was spent. If we look at Apple's more recent buybacks, the annual return rate is even greater. It's incredible. If Apple had spent its extra cash to buy shares of other companies, and saw the rate of return it has with this large an amount spent, I think most would agree it had done remarkably well. And, of course, it could reissue shares any time it wants and sell them - at a huge gain. It could sell shares at one third the current share price and still come out ahead - with more money available to spend on whatever than it would have had had it not done the buybacks.
More than anything, at least speaking generally, share buybacks tend to concentrate future share price moves. And in Apple's case, those future share price moves have been on the whole quite positive. And Apple had a lot of money to spend to concentrate those positive share price moves a lot. Without having spent a single additional dime of their own, shareholders who have been along for the whole ride have accumulated about 61% more ownership in Apple - and its future earnings - than they would have had if Apple had not done the buybacks.
I just don’t like buybacks. The best way to grow the company is to... grow the company. And I especially don’t like them wasting vast sums of money on 1 or 2 movies as they have been doing (to the tune of hundreds of millions of dollars!).
IMO, a better use of those billions would be investing in more stuff like their own silicon, RAM, batteries and engineers.
LOL they *are* doing all of those things. Why do you care what they do with their pile of money?
Apple's buybacks over the last 8 years, considered in the aggregate, are looking like one of the greatest financial maneuvers of all time. It has created tremendous additional wealth for shareholders who held on to their positions, in addition to the wealth created for those shareholders by the company's normal operations.
Apple has now bought back about 2.6 billion shares at a total cost of about $359 billion and an average share price of just under $138. The effective cost of the buybacks - taking into account lost net interest income and dividend savings - is about the same, perhaps a little less. (My estimates put it at about $354 billion.) In order for Apple's share price to be the same as it is now, with those 2.6 billion additional shares still outstanding, Apple's market cap would have to be more than $1.1 trillion higher than it currently is - at over $3 trillion - with that $354-ish billion still being on Apple's books as the reason for the higher market cap. That's not plausible. Apple is, effectively, more than $780 billion ahead on its buybacks.
(Of course, we could always say that Apple would have done better to do something else with the money - maybe by Tesla or invest more in nano technology. But such counter-factuals are hard to assess. The comparison to just having held on to the money is a pretty straightforward one.)
Apple's average annual return on the money it has spent buying back shares is now about 40%. That's weighting the money spent by how long ago it was spent. If we look at Apple's more recent buybacks, the annual return rate is even greater. It's incredible. If Apple had spent its extra cash to buy shares of other companies, and saw the rate of return it has with this large an amount spent, I think most would agree it had done remarkably well. And, of course, it could reissue shares any time it wants and sell them - at a huge gain. It could sell shares at one third the current share price and still come out ahead - with more money available to spend on whatever than it would have had had it not done the buybacks.
More than anything, at least speaking generally, share buybacks tend to concentrate future share price moves. And in Apple's case, those future share price moves have been on the whole quite positive. And Apple had a lot of money to spend to concentrate those positive share price moves a lot. Without having spent a single additional dime of their own, shareholders who have been along for the whole ride have accumulated about 61% more ownership in Apple - and its future earnings - than they would have had if Apple had not done the buybacks.
I just don’t like buybacks. The best way to grow the company is to... grow the company. And I especially don’t like them wasting vast sums of money on 1 or 2 movies as they have been doing (to the tune of hundreds of millions of dollars!).
IMO, a better use of those billions would be investing in more stuff like their own silicon, RAM, batteries and engineers.
I'm not a big fan in general of corporations returning capital to shareholders. I think it cuts against the fundamental premise (as I see it) of equity investment - the belief that, for whatever reasons, a given corporation is likely to make better use of the capital than the investor would during that time period. I think some corporations return capital sooner than they should or otherwise under circumstances when they shouldn't.
That said, for some corporations returning capital makes sense. For instance, they have far more retained earnings than they can foresee using or needing. At some point they should start returning capital rather than just build mountains of cash that are most likely to just sit there for long periods of time. And the possibility that a given corporation will eventually return capital to shareholders is why equity investment makes sense. If that possibility didn't exist, there'd be little reason for increasing share prices.
Once it makes sense to return capital to shareholders, there's two main ways of doing so - dividends and share buybacks. I think the latter is, in most cases, better for a number of reasons. For one, it gives individual investors the choice of when they will have taxable events. If a company uses X amount of money to do buybacks, individual shareholders can effectively recreate the effects (for themselves) of the company having used that amount of money to pay dividends instead. The reverse is not true. If a company uses that money to pay dividends, the taxable event decision has been made for shareholders. Buybacks also tend to reward long-term shareholders rather than short-term shareholders. And if a company believes its shares are significantly undervalued, buybacks make sense. The company is in position to take advantage of the markets' failure to fairly value its shares, expecting that the market will eventually (more) fairly value them.
In Apple's case, we aren't talking about money that Apple might otherwise use for, ,e.g., R&D. Apple already spends as much money as it thinks makes sense on such things. This is money that's left after Apple spends whatever it thinks it should on other things. Returning it to shareholders doesn't take away the ability of Apple to spend money on such things. It's because Apple isn't going to spend this money on such things that this money is available to be returned to shareholders. Further, if for some reason Apple discovered itself needing this money, it could get it back (and then some) by reversing the process. It could issue shares and sell them and have even more money available than it would have had it not done the buybacks.
Comments
Just how many shares are there, anyway?
"When gauging the magnitude of the upcoming quarterly cash dividend increase, a 10% increase likely represents a floor. There are two reasons behind such an assertion:
Dividend strategy. Apple follows a stable dividend policy characterized by a steady dividend payout that reflects its long-term earnings potential. Instead of dividends closely following near-term earnings swings, the two variables align when looking at long-term trends.
Apple’s share buyback pace. As Apple buys back shares, the company pays out less in the way of cash dividends. This is made possible because repurchased shares are retired, reducing the number of outstanding shares. For every 100 million shares that Apple repurchases, the company saves approximately $300 million on cash dividends per year. Since reinstating the dividend, the amount of cash that Apple has spent on dividends has increased by 30% while the quarterly cash dividend has increased by 92%. As long as Apple continues to buy back significant amounts of stock, the company will be able to increase the quarterly cash dividend by 10% and not actually incur additional dividend expense."
link to the above: https://www.aboveavalon.com/notes/2019/4/24/apples-400-billion-buyback-program
and;
https://investorplace.com/2019/08/time-alphabet-google-stock-buybacks/
Evidently, some investors want Google to do even larger buybacks.
i would not at all be surprised if the price dropped low enough, say >30-35% (around 210-227, which incidentally was around late 2018’s previous all time high), that Apple would consider another one time expanded stock buy back. Of course, the timing would depend a lot on how the virus fight is shaping up. Apple has the benefit of time and a lot of cash in hand to wait it out.
Apple will surely expand its buyback program again, likely in the third fiscal quarter. It does that every year regardless of stock price. As the previous authorization gets close to being used up, Apple expands it (or authorizes a new program) in April or May. As of the end of the first fiscal quarter, Apple had $59 billion in remaining authorization. At the end of the second fiscal quarter Apple typically has $10-25 billion left on its authorization (though last year it had $39 billion) and that's when it increases the authorization.
2013 - 0.33 B
2014 - 0.49 B
2015 - 0.33 B
2016 - 0.28 B
2017 - 0.25 B
2018 - 0.41 B
2019 - 0.35 B
My numbers are slightly different because I count share purchases made through ASR agreements in the quarter (or year) in which they are paid-for. Apple appears to count them in the quarter (or year) in which they are delivered.
I know of people (in the 1950’s) thinking the transistor wouldn't succeed and tubes would always be everything.
Note that “Tesla just started” means something else than you make of it.
Also they did just start mass producing electric cars, so very relevant.
Also, I did nowhere mention Musk started TESLA (irrelevant btw.)
Apple's buybacks over the last 8 years, considered in the aggregate, are looking like one of the greatest financial maneuvers of all time. It has created tremendous additional wealth for shareholders who held on to their positions, in addition to the wealth created for those shareholders by the company's normal operations.
Apple has now bought back about 2.6 billion shares at a total cost of about $359 billion and an average share price of just under $138. The effective cost of the buybacks - taking into account lost net interest income and dividend savings - is about the same, perhaps a little less. (My estimates put it at about $354 billion.) In order for Apple's share price to be the same as it is now, with those 2.6 billion additional shares still outstanding, Apple's market cap would have to be more than $1.1 trillion higher than it currently is - at over $3 trillion - with that $354-ish billion still being on Apple's books as the reason for the higher market cap. That's not plausible. Apple is, effectively, more than $780 billion ahead on its buybacks.
(Of course, we could always say that Apple would have done better to do something else with the money - maybe by Tesla or invest more in nano technology. But such counter-factuals are hard to assess. The comparison to just having held on to the money is a pretty straightforward one.)
Apple's average annual return on the money it has spent buying back shares is now about 40%. That's weighting the money spent by how long ago it was spent. If we look at Apple's more recent buybacks, the annual return rate is even greater. It's incredible. If Apple had spent its extra cash to buy shares of other companies, and saw the rate of return it has with this large an amount spent, I think most would agree it had done remarkably well. And, of course, it could reissue shares any time it wants and sell them - at a huge gain. It could sell shares at one third the current share price and still come out ahead - with more money available to spend on whatever than it would have had had it not done the buybacks.
More than anything, at least speaking generally, share buybacks tend to concentrate future share price moves. And in Apple's case, those future share price moves have been on the whole quite positive. And Apple had a lot of money to spend to concentrate those positive share price moves a lot. Without having spent a single additional dime of their own, shareholders who have been along for the whole ride have accumulated about 61% more ownership in Apple - and its future earnings - than they would have had if Apple had not done the buybacks.
IMO, a better use of those billions would be investing in more stuff like their own silicon, RAM, batteries and engineers.
That said, for some corporations returning capital makes sense. For instance, they have far more retained earnings than they can foresee using or needing. At some point they should start returning capital rather than just build mountains of cash that are most likely to just sit there for long periods of time. And the possibility that a given corporation will eventually return capital to shareholders is why equity investment makes sense. If that possibility didn't exist, there'd be little reason for increasing share prices.
Once it makes sense to return capital to shareholders, there's two main ways of doing so - dividends and share buybacks. I think the latter is, in most cases, better for a number of reasons. For one, it gives individual investors the choice of when they will have taxable events. If a company uses X amount of money to do buybacks, individual shareholders can effectively recreate the effects (for themselves) of the company having used that amount of money to pay dividends instead. The reverse is not true. If a company uses that money to pay dividends, the taxable event decision has been made for shareholders. Buybacks also tend to reward long-term shareholders rather than short-term shareholders. And if a company believes its shares are significantly undervalued, buybacks make sense. The company is in position to take advantage of the markets' failure to fairly value its shares, expecting that the market will eventually (more) fairly value them.
In Apple's case, we aren't talking about money that Apple might otherwise use for, ,e.g., R&D. Apple already spends as much money as it thinks makes sense on such things. This is money that's left after Apple spends whatever it thinks it should on other things. Returning it to shareholders doesn't take away the ability of Apple to spend money on such things. It's because Apple isn't going to spend this money on such things that this money is available to be returned to shareholders. Further, if for some reason Apple discovered itself needing this money, it could get it back (and then some) by reversing the process. It could issue shares and sell them and have even more money available than it would have had it not done the buybacks.