AAPL Stock: 126.41 ( -2.13 )

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AAPL stock buyback program begins, $10B to be repurchased

updated 02:00 am EDT, Tue October 2, 2012

Offsets shares given to employees in lieu of cash

As previously announced back in March, Apple has now launched its plan to buy back some $10 billion in stock as a way to offset the shares it has awarded to executives and senior personnel. The purchase plan spans three years and, although technically underway, is controlled by the discretion of the board, which will determine the best times in the coming 36 months in which to buy stock and in what quantities. The plan is not expected to have any significant impact on the company's financials, or affect the dividend the company will pay to investors.

Though some investors had pushed for a stock buyback, many more had urged Apple for years -- unsuccessfully -- to begin a dividend program, which it finally agreed to last March as its cash stockpile surpassed $100 billion. While former CEO Steve Jobs had originally seen the cash stockpile as a defense against acquisition or takeover, in later years he often cited the opportunity to purchase companies without excessive financing fees as the reason for the reserves.

When Tim Cook became CEO shortly before Jobs died, he indicated that the company would eventually have to deal with the dividend question, admitting that Apple had "more money than it needed" for present and future needs. Despite the dividend program, Apple's cash reserve has continued to grow and now tops $117 billion.

Ironically, recent missteps by the company have lowered the stock price significantly from its recent high of $705.07. The stock closed Monday at $659.39 per share, though it is up slightly in after-hours trading. The drop in price has been brought on by bad publicity over Apple Maps, which though often overblown in press reports has been seen as a downgraded experience by users around the globe for its lack of transit directions, spotty quality of some of the satellite imagery and in some areas missing or inaccurate information. Though Cook apologized and promised the app would improve, and although iOS 6 and the iPhone 5 have seen record sales and adoption rates, the misstep was seen as an opportunity for other companies -- particularly Google, Samsung, Microsoft and Nokia -- to pounce on a perceived weakness.

Despite the issue over Maps and some other, lesser teething troubles, Apple is expected to report strong sales and earnings as well as a record-breaking year overall in its Q4 and fiscal 2012 report, which will be revealed on October 25. Many expect the company to announce some new or refreshed products heading into its first fiscal quarter of 2013, the holiday buying season, to add to the appeal of the iPhone 5, 2012 iPad, and recently-refreshed MacBook and iPod lines.

by MacNN Staff





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