Call me cynical, but they just announced the 15/16 billion in bonds sold today will be it for this year. On one had with 8 billion remaining from the original allotment that gives them up to 24 billion for just buybacks this year which is in excess of the 1.8 billion a month average they would have to spend to hit 58 billion in 32 months.
What's my concern? If from the fall of this year to all of 2014 is so loaded like Cook said the price will never be cheaper than now so why not buy heavily? The natural conclusion is they are more concerned about the future than Cook let on...which would lead me to believe he embellished some claims.
Obviously in the short term the market is expressing confidence with Apple pulling the Nasdaq higher today. I will be really curious to see how much of that buyback they use by next quarters report.
I'm not sure that this hasn't already been said, but the reason they are selling bonds is because they actually MAKE money by selling them. If you sell bonds at 2.5% and buy back stock which is paying a 2.9% dividend, then you don't have to pay the higher dividend rate out. You make 0.4% on the deal. Even when the price goes up and the Div yield goes down a bit, you still essentially get the money for free. Thus, this is a super smart move by AAPL......
Not necessarily. The stock buyback will happen regardless of share price. It is a vote of confidence that AAPL is as good a place as any for the company to put their cash regardless of what the share price does over the next 3 years. The decision is not one to try to "Make Money" on the re-purchase. They will buy at intervals regardless - and they know the buyback can help accelerate upward share price movement. Overall, the company doesn't care what it pays for shares throughout the buyback period - it is a long-term vote of confidence in the stock, and ultimately simply retires cash and shares into oblivion (sort-of).
I get what you are saying. Apple is so cheap it's a good buy"...regardless of share price." That just seems like a bad use of the money. Clearly buying at the lowest price possible should be the goal. It's about spending money wisely and if they dont care what they pay than that is concerning.
Like I said, maybe I'm too cynical and reading too much into it. Clearly if the future is so bright this will be the last chance to get shares in the 400s for a while so why not do it? We'll see how it plays out.
all that i can tell you is that pretty soon the poo is going to hit the fan here. apple will blow its money on its own shares while everyone bails and sells to them. i'm going to short AAPL, or try to, JUST BEFORE THAT HAPPENS (6 months?)
I'm amazed how many people express confidence Apple will be 500, 600, 700+ in the next couple of years, but cant grasp the concept if that is accurate Apple should be buying back as many shares as possible now...not in 2014 and 15. Clearly they've left 34-42 billion of the buyback for those years. Suggests that they arent as sure the stock will be higher than now in those years and who would know better?
Dude, the purpose of the buyback is to stabilize the stock price. Apple isn't buying shares for trading. If they buy all at once, it will cause big swings in price which defeats the purpose of buyback.
The purpose is to invest in the company when the valuation suggests it is the best use of capital. If you think it is to "stabilize" the stock price you better sell.
If great products are lined up for the fall and all of 2014 when will the stock price ever be cheaper? It's still 38% off the high so I dont think they need to worry about causing a big price swing at this point. I think there is a point where they would stop buying, but it's a little premature to cite that as a concern at this level, no?
I really didnt think it was that complex a concept. Buying back shares at low prices = good. Buying back shares at high prices = bad. If the fall and all of 2014 offer great new products shouldnt that send the share price higher? If so would it not make more sense to buy more shares before that happens?
They have a huge buyback planned over the next 32 months, but nowhere does it say it has to take all 32 monhts, if indeed the stock is cheap now, but will climb in the fall and all of 2014 as great and new products are released why not have all the money available now for buybacks? Instead they are leaving 34 billion for the next two years.