Back in March, Apple CEO Tim Cook announced to investors what the company plans to do with the estimated $100 billion it had been sitting on for years. With that kind of money floating around, it is difficult to imagine how Apple’s financial team came up with the hybrid plan that was eventually announced.
According to Fortune, the mix of dividend payout and share repurchasing began on Sunday with the implementation of the buyback portion of the plan.
Cook announced during the investor conference call that Apple would be executing the $10 billion stock-repurchasing plan starting in the fiscal 2013 quarter. The announcement left investors less-than-impressed. Typically, a company buys back stock from its investors when the market is flooded with shares, causing it to be “undervalued.” Considering AAPL is trading on the NASDAQ at approximately $665 per share, it doesn’t seem like the company has much need for a buyback program. Our early predictions for what Apple would do with the oversized nest egg was to continue to do nothing considering the personal cost to do anything with it at all. A share repurchase seemed ridiculous at the time.
In March, financial analyst Toni Sacconaghi wrote of his disappointment with Apple’s decision to repurchase shares from investors. He predicted that this program wouldn’t generate much of an increase in earnings per share, one to two percent per-year at best.
When Fortune contacted Sacconaghi this week to see if he had anything new to add, the financial analyst said, “Apple announced this in March along with its dividend, so ostensibly this should be fully captured in Apple’s share price today.”