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Apple's stock buybacks spurred massive share price increase


With Apple making more money than it knows what to do with, the company in March of 2012 announced a capital return program consisting of stock buybacks and dividends. The initial program was designed to return $45 billion in value to shareholders, but as the money continued to roll in, Apple earlier this year upped the program to $130 billion.

During Apple's most recent earnings report, Apple CFO Luca Maestri noted: "We have now taken action on over $74 billion of our $130 billion capital return program with six quarters remaining to its completion."

With the majority of Apple's $130 billion capital return program centering on stock buybacks, Apple's share price has been on quite a roll as of late. And according to a recent report in Bloomberg, Apple's stock buybacks and its subsequent impact on the company's share price is unrivaled.

The iPhone maker is up 25 percent since it spent $18 billion on its own shares between January and March and rallied 32 percent after a $16 billion buyback in 2013. Those are the highest four-month returns among the 20 biggest quarterly repurchases by any company since 1998, according to data compiled by Bloomberg and Standard & Poor's.

While many factors go into a company's share price, sweeping stock buybacks certainly help to the extent that they significantly reduce the number of free floating shares and thus help pump up quarterly earnings per share (EPS).

Highlighting the massive scale of Apple's capital return program, Apple during the March 2014 quarter alone spent more money on stock buybacks than Google generated in revenue during the same period.

On a related note, last year we detailed how the extremely low interest rates Apple took advantage of to finance its capital return program helps the company save money in the long run. In short, the interest Apple owes, over time, turns out to be less than the dividends it would otherwise be on the hook for.

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