Apple Says It Will Buy Back $100 Billion in Stock
Apple has said it would buy back an additional $100 billion in stock. This is by far the largest increase in its already historic record of returning capital to investors. The company didn’t provide a timeline for the repurchases.
Luca Maestri, Apple’s chief financial officer, said in an interview that Apple was making significant investments in hiring, research and development, and manufacturing, “but we also have a very, very profitable business.”
He said that “because we’re making all the right investments all around the company, it makes perfect sense for us not to keep the cash on our balance sheet but return it to investors.”
In a related development, the company also increased its dividend by 16 percent to 73 cents a share, pushing past Exxon Mobil to become the largest dividend payer, according to S&P Dow Jones Indices.
Apple’s stock buyback fits into a broader trend of companies using the financial windfall from President Trump’s tax cut to reward shareholders. Share buybacks, which are reaching record levels, are great for investors, including executives and employees, because they reliably lift stock prices by limiting the supply of shares for sale.
However, critics say the actions can take money away from potential investments in hiring or research and development, and can increase economic inequality because they typically benefit wealthier people.
Investors should want companies to reinvest in themselves and their employees versus repurchasing their own stock to increase the share price, said William Lazonick, an economics professor at the University of Massachusetts, Lowell, who studies stock buybacks. “It’s nothing but a manipulation of the stock market.”
No company has ever done stock buybacks like Apple. In the most recent quarter, Apple repurchased $23.5 billion in stock — the largest single stock buyback ever and more than the market value of 275 of the companies in the Standard & Poor’s 500-stock index, said Howard Silverblatt, a senior index analyst with S&P Dow Jones Indices.
Source: New York Times
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