Famously flush with cash, Apple Inc. (NASDAQ:AAPL) has said that it intends to buy back $60 billion worth of shares by the end of 2015 as a way of returning some of that money to shareholders, but considering the pace that Apple has been buying shares already, it might decide to up that number when it files its 1Q14 earnings next week.
Apple is well ahead of schedule for its $60 billion repurchase authorization
“We believe that Apple may add $30 billion to its current repurchase plans through year end calendar year 2015,” writes Bernstein Research analyst Toni Sacconaghi, reports Benjamin Pimentel for MarketWatch. Sacconaghi estimates that Apple Inc. (NASDAQ:AAPL) has already bought between $45 billion and $50 billion in stocks, which would put it well ahead of where it needs to be to hit its current estimate.
Even though Apple Inc. (NASDAQ:AAPL) has committed to a particular pace of buybacks, front loading it to that extent would mean taking a long break from returning value to shareholders giving them time to get antsy and press for more. Since this will be the first time we hear about Apple’s buyback plans for the year, there is a chance that the tech giant surprises us.
Icahn previously asked for more buybacks and was rebuffed
Of course, some shareholders have already been insisting that Apple Inc. (NASDAQ:AAPL) return some of the cash that it has on hand. Activist investor Carl Icahn spent months demanding an increase in the company’s buyback plan to no avail, eventually dropping the issue when the advisory firm Institutional Shareholder Services sided with Apple management against him. Unlike some of Icahn’s other activist campaigns (e.g. eBay), the push for Apple buybacks was fairly cordial because Icahn doesn’t take issue with the way that management is leading the company.
Still, it would be strange for Apple Inc. (NASDAQ:AAPL) to fight Icahn’s request, risking a major fight with someone who has been through more than his share, and then go on to increase the buyback plan anyways at the end of the quarter.
Apple Inc. (NASDAQ:AAPL)’s cash holdings have increased thirty-fold since 2004, meaning that it has more cash than either the US or UK government (not more assets, obviously, but more cash). While it’s a good sign for companies to keep some of their powder dry both to take advantage of opportunities that suddenly appear, such as buying a promising new startup, or weathering a downturn, it’s hard to imagine how Apple Inc. (NASDAQ:AAPL) justifies keep such an incredible amount of money laying around, not earning returns.