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by blantonl 5204 days ago
let's hope not, because stock buy backs can be interpreted as a signal that management thinks tremendous earnings growth is behind the company.
3 comments

I think you're mixing up cause and effect here. Even if it's true that stock buy backs are frequently undertaken by companies which doubt their future growth potential (I have no idea if this is true), I don't think there's any danger of a buyback from Apple sending this signal. They're in a historically unique position, and whatever their decision, it's not going to be analyzed solely based on the status of other companies who have undertaken similar actions.
It's taken as a sign that the company doesn't have anything more productive to do with the cash than buy back its own stock. This could be a positive or a negative.

If Apple had $5b in cash and decided to buy back stock, that would be a bit bearish -- they certainly can continue to make incremental cash investments (in supplier agreements, new products, etc.). $100b (which is actually probably $110-120b now, a month later) is way beyond that. Getting $50b returned to shareholders wouldn't be a sign of lack of investment options for Apple.

Why?

I've read that they offer few benefits, but I've never heard this explanation. I also don't see how it makes sense for a company in their position?

Stock buy backs are used to reduce the number of outstanding shares available - which results in shares increasing in value due to earnings per share now increasing. It is one way to "mask" slowing growth.