I saw in the news yesterday that someone was looking to buy Paramount for $26B or thereabouts. I hope they at least went through the thought exercise of whether this builds more value than five huge acquisitions that could strengthen their offerings.
Apple has done buybacks for a while though, it is only much larger now. I believe their historical buybacks were around the $25b.
Doing this buyback is an indication that the roic is not great enough and deem it better to give it back to shareholders. Huge acquisitions are neither easy or cheap, cheap in the sense of not only the multiple you are paying but also the costs downstream of having to take over that company.
BigCorp buys BigCorp deals seem to be about consolidating the market to 1)reduce competition 2)raise prices 3)kill jobs = a)raise bonuses b)promise a higher stock value. Also synergy.
We'll get a pre-merger announcement about creating new jobs; biz media everywhere will excitedly amplify it.
Typically, the DoJ can't rubber stamp these deals fast enough but sometimes they balk - or at least pretend to.
Acquisitions tend to destroy value, especially "non core" acquisitions. I think they understand that not becoming a chaebol owning half the economy is actually a good idea.
You tell me what am I missing. They had $17,645,500,000 in unlevered FCF last quarter. With $32,695,000,000 in Cash and CE on their balance sheet.
Edit: I see the gap now with your question. The buyback plan/funds are not executed all at once. A company approves amounts to be used for buybacks and then it happens over time. My point is that these buybacks are pretty normal for apple. You can look at Apples historical buyback plans and I think the last announced one was a year ago for $90b.
How is it ridiculous. Go look at their historical buyback plans.
2018 - $100b
2021 - $90b
2022 - $90b
2023 - $90b
2024 - $110b
Is it a large? Yes. Is it out of the normal for them? No. It is also not especially a difficult reach when looking at their existing cash/security balances and FCF.
