Apple Inc. (NASDAQ:AAPL)’s share buyback program has increasingly become more lucrative for investors. That’s despite Carl Icahn dropping his proposal to push the company to spend another $50 billion on stock repurchases. Over the past 12 months, the tech giant has retired shares worth more than $40 billion, including the latest $14 billion buyback when the stock took a nosedive after the company missed iPhone sales estimates.
Apple CEO should stop timing the market
But Robert Weinstein of The Street says that Tim Cook shouldn’t be so focused on the daily stock movement. He needs to worry about creating the next big iHit product that people will stand in line for days in advance to get their hands on. Recently, the Apple Inc. (NASDAQ:AAPL) CEO told The Wall Street Journal that he was surprised to see the market’s reaction to lower-than-the-consensus iPhone sales and revenue guidance. Cook may be opportunistic in buy the stock when cheap. But how does he know the stock wouldn’t get cheaper? That’s why Weinstein says Tim Cook should stop timing the market.
Third Point's Dan Loeb discusses their new positions in a letter to investor reviewed by ValueWalk. Stay tuned for more coverage. Loeb notes some new purchases as follows: Third Point’s investment in Grab is an excellent example of our ability to “lifecycle invest” by being a thought and financial partner from growth capital stages to Read More
Apple Inc. (NASDAQ:AAPL) doesn’t have to follow the orders of Carl Icahn either. For about half the money the iPhone maker spent on buybacks, it could have purchased Yahoo! Inc. (NASDAQ:YHOO). Buying the digital media company looks more attractive than buying its own shares. Yahoo controls about 24% of Alibaba, which is currently valued at more than $100 billion. It means more than 60% of the Sunnyvale, California-based company’s current market value is in cash and investments.
Buyback makes it easy for Apple to raise dividend
However, there are silver linings. A reduction in the supply of anything makes it more valuable, and Apple Inc. (NASDAQ:AAPL) is no exception. There will be fewer shares to pay a dividend on, bringing down the total cost of declaring dividends. As a result, Apple can easily increase its dividend. For the same reason, many investors have fallen in love with the stock.
Apple Inc. (NASDAQ:AAPL) shares skidded 0.46% to $522.81 at 12:50 PM EST on Monday.