From the point of view of shareholders, stock buyback is superior to paying dividends taxwise. If shareholders just hold the stock, the price rises, and they don't have to pay any taxes.
Rather, they taxes on it when they sell. Of course, the cost is that you don't have anything in your pocket today. And gains written on paper are just as easy to erase.
Typically this is not true. When public companies buy their own stock, this is considered a very positive signal. Apple could do most anything they want (including buying most any company) with their cash hoard.
Not necessarily. IBM has had 20 consecutive quarters of declining revenue [1]. They continue to buy back stock, adding $3B to their repurchase program last year. They've bought back stock furiously since 1999 [2]. It's a defensive measure to reduce the share float, and thereby juice EPS.
It's a good policy to buy back stock whenever you have excess cash flow and the stock is undervalued compared to your other investment options. An example might be your stock has a PE ratio of 8, so it's yielding 12.5% and your other options look to yield 10% or less.
Of course I'm not saying IBM is right, or undervalued. If profits are falling a 12% yield might be a 6% yield before you know it, that's why valuations are more complex than my simplistic example. And many companies do buybacks to juice stock prices for the execs options, regardless of value, so it's not a grant signal.
And they chose to buyback stock and pay dividends, which means they think those other uses for their cash are unproductive relative to buying back the stock.