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Apple bought back $14 billion of its own shares in the last two weeks

Posted: , by Alan F.

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Apple bought back $14 billion of its own shares in the last two weeks
Apple CEO Tim Cook revealed on Thursday that the tech giant purchased $14 billion of the company's own stock over the last two weeks. The executive was surprised to see Wall Street react to Apple's latest quarterly earnings report by taking the shares down 8%. Cook, feeling that this was a bargain Apple couldn't pass up, used some of the company's cash hoard to make the purchase. The report showed that Apple sold a record 51 million units of the Apple iPhone in the quarter, but that was less than the 55 billion that Wall Street was expecting.

Now you might be asking, hey, isn't this what billionaire investor Carl Icahn wants Apple to do? Apple has repurchased $40 billion of its shares over the last 12 months, a record for any company. But Icahn wants Apple to buy back $150 billion of its stock, using borrowed money. By buying back its own stock, Apple retires those shares. Fewer shares outstanding changes the demand-supply balance and also raises the earnings per share figure, used by analysts to compute the P/E ratio of the stock. Retiring company shares makes Apple look like a bargain to some investors. Shareholders will vote on Ichan's plan during the February 28th stockholder's meeting.

"You want to be able to adjust for the long-term interest of the shareholders, not for the short-term shareholder, not for the day trader. We may see a huge company tomorrow that we want to acquire or something may happen in the stock market that's unpredictable."-Tim Cook, CEO, Apple

Last April, Apple announced that it would return $100 billion of capital to investors between $60 billion in share repurchases and dividends. But Cook made it clear that Icahn's request was out of the question. He said that Apple needs to have cash available just in case it needs to make an important purchase. The CEO also made it clear that the purchase of a big company is not out of the question. "We have no problem spending ten figures for the right company, for the right fit that's in the best interest of Apple in the long-term. None. Zero," said Cook.

source: WSJ

18 Comments
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posted on 06 Feb 2014, 23:26 5

1. XperiaOptimusOne (unregistered)


*sigh* Wish I could understand any of this business economy stuff.

posted on 06 Feb 2014, 23:32 2

2. networkdood (Posts: 6263; Member since: 31 Mar 2010)


just boils down to greed and how money a company can make - and, thus, is the inherent problem with capitalism and, more importantly, why our gov't is failing the American people...

posted on 06 Feb 2014, 23:43 3

3. PBXtech (Posts: 970; Member since: 21 Oct 2013)


It's why corporations rule the world, not governments. At the end of the day, it's always about the money.

posted on 06 Feb 2014, 23:48 2

4. Sauce (unregistered)


It will always be about money, in every aspect, not just governments and corporations. Currency has been around for thousands of years, and having the most of it will always be highly seen, sadly.

posted on 06 Feb 2014, 23:53 1

6. joey_sfb (Posts: 2780; Member since: 29 Mar 2012)


Its ok. Apple is making a big bundle selling iPhone 4 to India at a premium price of course.

I bet Samsung is down right green eyes on this. Should sent some staff to interview the lines in India. SGII anyone? LOL!

posted on 07 Feb 2014, 02:43

12. Leo_MC (Posts: 496; Member since: 02 Dec 2011)


That's pretty simple: Apple brought back in US 40 billion $ from his offshore money ;).

posted on 07 Feb 2014, 15:47

17. downphoenix (Posts: 2295; Member since: 19 Jun 2010)


well, I guess they are a stupid company then, listening to Carl Icahn. I hope that Apple suffers in the long run for their insolence.

posted on 06 Feb 2014, 23:48 1

5. tenho1982 (Posts: 58; Member since: 29 Dec 2013)


Think about it in the simplest sense: when more people buys something that doesn't increase in quantity, its demand increase and price is up. Apple's share price dropped 8% last quarter but could have been more if it didn't buy its own shares, obviously.

posted on 07 Feb 2014, 00:23

7. XperiaOptimusOne (unregistered)


Forgive my ignorance, I didn't quite get your last sentence. Define "shares". The way I understand you is that there was not enough demand for iPhones so they bought it themselves?

posted on 07 Feb 2014, 00:36 2

8. Alan01 (Posts: 180; Member since: 21 Mar 2012)


The iPhone has nothing to do with what Apple bought.They went into the market place and purchased $14 billion of their own stock. The stock had declined because Apple did not sell asmany iPhones as Wall Street had expected.

By buying back its own stock, Apple changes the balance between supply and demand. Less supply of stock could raise the stock price. It also raises earnings per share numbers, lowers the P/E ratio, and makes the stock seem attractive to fundamental analysts.

Alan F.

posted on 07 Feb 2014, 01:56 1

9. Gaurav008 (Posts: 274; Member since: 20 Jul 2012)


*55 million that Wall Street was expecting.

posted on 07 Feb 2014, 01:58 2

10. Insignificant (Posts: 190; Member since: 22 Sep 2012)


Less than the 55 BILLION Wall Street was expecting? I think they expected slightly too much

posted on 07 Feb 2014, 03:57 5

15. Ashoaib (Posts: 1509; Member since: 15 Nov 2013)


Wall street wants apple to sell iphones not only to 6 billion human population of the world but also to all animal, birds, fish population too... think broad :p

posted on 07 Feb 2014, 02:01 1

11. Insignificant (Posts: 190; Member since: 22 Sep 2012)


Less than the 55 BILLION Wall Street was expecting? I think they expected slightly too much.

posted on 07 Feb 2014, 03:24 1

13. PapaSmurf (Posts: 7754; Member since: 14 May 2012)


Wall Street must be in crack if they think Apple can sell 55 BILLION iPhones in a quarter.

posted on 07 Feb 2014, 03:41

14. xfire99 (Posts: 451; Member since: 14 Mar 2012)


No, its whoever write the article that are on crack. Apple "just" sold 51 millions Iphones and Wall street expected 55 millions Iphones sales,not 55 billions. :p

posted on 07 Feb 2014, 09:23 1

16. mrblah (Posts: 428; Member since: 22 Jan 2013)


They really need to go private like Dell, share holders are dumb and scream at them to make bad decisions because they don't know what they are talking about.

posted on 08 Feb 2014, 12:07

18. bigstrudel (Posts: 518; Member since: 20 Aug 2012)


Ive worked for several public corporations. I'd NEVER put stock in them after I saw how they run from the inside.

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