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

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.


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

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17 Comments

1. XperiaOptimusOne unregistered

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

2. networkdood

Posts: 6330; Member since: Mar 31, 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...

3. PBXtech

Posts: 1032; Member since: Oct 21, 2013

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

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.

6. joey_sfb

Posts: 6794; Member since: Mar 29, 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!

17. downphoenix

Posts: 3165; Member since: Jun 19, 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.

5. tenho1982

Posts: 68; Member since: Dec 29, 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.

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?

8. Alan01

Posts: 646; Member since: Mar 21, 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.

9. Gaurav008

Posts: 328; Member since: Jul 20, 2012

*55 million that Wall Street was expecting.

10. Insignificant

Posts: 192; Member since: Sep 22, 2012

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

15. Ashoaib

Posts: 3309; Member since: Nov 15, 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

11. Insignificant

Posts: 192; Member since: Sep 22, 2012

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

13. PapaSmurf

Posts: 10457; Member since: May 14, 2012

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

14. xfire99

Posts: 1207; Member since: Mar 14, 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

16. mrblah

Posts: 577; Member since: Jan 22, 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.

18. bigstrudel

Posts: 621; Member since: Aug 20, 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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