updated 07:52 pm EDT, Fri July 25, 2014
Total of $28B spent in fiscal 2014, average price $85 per share
Regulatory filings with the SEC have revealed that Apple spent another $5 billion during the June quarter as part of its share-repurchase program to retire an additional 58 million shares of stock at an average (split-adjusted) price of $85.23 per share, still well below the current trading average, and about the same price per share as well CEO Tim Cook first announced the buyback plan just over two years ago. The recent expenditure is less aggressive than seen in quarters where the share price was lower, signalling reduced buyback activity.
Shortly after the initial announcement of repurchasing shares, AAPL took a tumble down to as low as $55 a share through much of 2013. This allowed the company to snap up stock at bargain prices, spending $26 billion on shares in calendar 2013, and an even more aggressive $23 billion in the first half of calendar 2014. Because Apple begins its fiscal year in October, the fiscal total for 2014 so far is $28 billion.
In part as a result of the moves, along with a 7-to-1 stock split accomplished last month and increased dividend payouts, the company's stock is now near its all-time high of around $100.73 (straight split-adjusted), closing today at $97.67. Because of the increase in shares as a result of the split but partially offset by the buyback program, AAPL would need to rise to $110 per share to truly beat its historical all-time high price, but $100.73 is still seen by most as the mark to beat. Most analysts believe the lower of the two benchmarks will happen this year, with a few investment banks and other financial institutions predicting that even the higher benchmark will be met or surpassed by year's end or shortly thereafter, based on an easy expectation of record demand for new and refreshed Apple products.
The company has proven to be incredibly savvy about repurchases. After record Q1 earnings that nonetheless managed to slightly miss analysts' expectations, AAPL plunged more than eight percent, which prompted the company to spend a record-breaking $14 billion in just a two-week period in late January. Since then, share prices have appreciated almost 25 percent. On average, Apple has bought shares at between 66 percent and 75 percent of the current value of the stock.
In total, Apple has spent some $51 billion on share buybacks and $21 billion in shareholder dividends over the past two years. Despite the enormous expenditures, Apple has continued to grow its cash hoard from $121 billion two years ago to $164 billion now, though an increasing percentage of that money is foreign earnings.
As a result, Apple has entered the commercial paper market for the first time in the recent quarter, and also arranged a $31 billion debt offering which, as the company itself noted, carries an interest rate far lower than it would cost the company in US taxes to "repatriate" the offshore cash pile. Apple also saves money by retiring shares of stock, for which it does not have to pay ongoing dividends. All buyback and dividend funds are currently paid for with domestic earnings and debt.
Currently, Apple now has just under six billion shares outstanding, but has another $39 billion earmarked for future repurchases, as first noted by AppleInsider. Depending on how the company feels the stock is valued presently, it may slow down on repurchases until such time as the stock dips in price again. However, if the board feels (with knowledge of future products and how well they are likely to do) that the stock remains undervalued, it may continue its spending spree. The current buyback program is in force until the end of calendar 2015.