The largest buy­backs of all time

Financial Mirror (Cyprus) - - FRONT PAGE -

its end­less num­ber of ac­qui­si­tions. Cisco is a com­pany that de­serves ku­dos for clear com­mu­ni­ca­tions in its earn­ings re­leases, as it spells out each time how many shares were bought and for what price, as well as show­ing what the cu­mu­la­tive tally has been over time. The flip side of the equa­tion is that the most re­cent count of 5.1 bln or so shares out­stand­ing com­pared to about 5.8 bln as of the same time in 2009.

As of Jan­uary 24, Cisco had re­pur­chased and re­tired 4.4 bln shares of its own com­mon stock. It was also prof­itable if you look at the av­er­age share price ver­sus re­cent trad­ing, as the av­er­age price for stock buy­backs was listed as $20.73 per share, bring­ing the to­tal buy­backs to about $90.7 bln since the com­pany be­gan its stock buy­back plan.

Mar­ket cap: $151 bln Div­i­dend yield: 3.1%

Exxon Mo­bil may have slowed its share buy­backs as the price of oil has plunged, but the oil and gas gi­ant used over $13 bln for share buy­backs alone in the year 2014. What is amaz­ing is just how many shares this com­pany has bought back — even in the wake of its $40 bln or so ac­qui­si­tion of XTO En­ergy in 2010.

Exxon had more than 6 bln shares out­stand­ing as re­cently as 2006, but this was down to about 4.2 bln shares most re­cently. Exxon’s buy­backs have been jokes about tak­ing the com­pany pri­vate over the next 15 to 20 years, but it al­most cer­tainly will take a re­turn to higher oil for that to oc­cur. Exxon may now fo­cus on rais­ing its div­i­dend, a move that was still ex­pected to oc­cur in the first half of 2015, even with lower oil prices.

Mar­ket cap: $287 bln Div­i­dend yield: 3.3%

Gen­eral Elec­tric is the whole im­pe­tus for this ar­ti­cle, af­ter an­nounc­ing its $50 bln buy­back plan. In­vestors will want to know that GE has al­ready shrunk its out­stand­ing share count from around 10.6 bln shares to about 10.0 bln shares. Buy­backs are not new here, but what is new is that GE, at least as of the new plans on Fri­day, in­tends to shrink its share count down to 8.0 bln to 8.5 bln by 2018.

GE’s re­struc­tur­ing into an industrial con­glom­er­ate is go­ing to gen­er­ate bil­lions of dol­lars for the par­ent com­pany — $30 bln or so from real es­tate sales, near term. An­other part of the fund­ing will be from a repa­tri­a­tion of some $36 bln in cap­i­tal that is cur­rently locked up over­seas, which will cre­ate a $6 bln tax pay­ment. The spin-off of the post-IPO shares of Syn­chrony Fi­nan­cial (NYSE: SYF) will come into play as far as GE’s plan to now keep the div­i­dend static through 2016, where GE may still be able to claim that the div­i­dend was raised with­out an of­fi­cial pay­out boost due to the size of Syn­chrony.

Mar­ket cap: $151 bln Div­i­dend yield: 3.1%

In­tel’s 2014 an­nual re­port sig­nalled that the board’s orig­i­nal ap­proval of share pur­chases had been amended to al­low up to $65 bln for share buy­backs, in­clud­ing some $20 bln of an in­crease that had been ap­proved in 2014, with some $12.7 bln re­main­ing avail­able to be used for buy­backs as of the end of 2014. In­tel said that, as the end of 2014, it shrank the float from 5.6 bln shares to 5.1 bln in just five years, with a to­tal of $54.2 bln in com­bined div­i­dends and buy­backs sent to share­hold­ers in that five years.

Now, go back even fur­ther to Jan­uary 2011. At that time, In­tel said: “Since the com­pany’s stock buy­back pro­gram be­gan in 1990, In­tel has re­pur­chased ap­prox­i­mately 3.4 bln shares at a cost of ap­prox­i­mately $70 bln. Taken to­gether since their in­cep­tion, In­tel’s div­i­dends and stock buy­back pro­gram have re­turned ap­prox­i­mately $91 bln to share­hold­ers.”

Mar­ket cap: $151 bln Div­i­dend yield: 3.1%

IBM has been the king of fi­nan­cial en­gi­neer­ing to grow earn­ings per share, hav­ing re­duced its share count even in 2013 by a third since the be­gin­ning of 2000. The com­pany keeps buy­ing back more and more shares as well. Its core busi­ness has not grown, but spend­ing bil­lions has helped it shrink the float even with the di­lu­tion of stock op­tions, re­stricted stock and other share-grow­ing ac­tiv­i­ties tech com­pa­nies have.

While IBM has used less cash to re­pur­chase stock of late, at the end of De­cem­ber 2014 IBM had ap­prox­i­mately $6.3 bln re­main­ing from the cur­rent share re­pur­chase autho­ri­sa­tion and promised to seek higher buy­back ap­provals ahead. Af­ter shrink­ing its float by 8% or so in the past year, IBM has spent well over $160 bln be­tween div­i­dends and buy­backs alone since 2000 to re­turn cap­i­tal to share­hold­ers. Big Blue now has less than a bil­lion shares out­stand­ing.

Mar­ket cap: $342 bln Div­i­dend yield: 3.0%

Mi­crosoft has been buy­ing back stock on and off for years now, and its div­i­dend yield is im­pres­sive. Growth has been spo­radic and a re­struc­tur­ing to cloud and mo­bile first un­der Satya Nadella may have run into head­winds af­ter a stel­lar re­cep­tion in 2014. A multi­bil­lion debt fil­ing from Fe­bru­ary in­di­cated that Mi­crosoft still had $31 bln re­main­ing un­der its prior $40 bln stock buy­back plan.

What in­vestors need to con­sider here is that Mi­crosoft has had two prior stock buy­back plans of $40 bln each, so if it com­pletes the planned buy­backs by the end of 2016, then it will have used $120 bln or so to re­pur­chase shares.

Also note that Mi­crosoft’s shares out­stand­ing count is still 8.2 bln. That means it takes a lot to move the nee­dle.

Mar­ket cap: $225 bln Div­i­dend yield: 3.1%

This is not au­to­mat­i­cally buy­backs.

Af­ter all, con­sumer prod­ucts rarely come with the same mar­gins as soft­ware and popular con­sumer elec­tron­ics gad­gets. Still, if you go back to early in 2005, around the time Proc­ter & Gam­ble planned to ac­quire Gil­lette, the com­pany sig­nalled that it would spend around $20 bln ac­quir­ing its own shares for the 18 months ahead. The Wall Street Jour­nal at the time had said it would be $18 bln to $22 bln.

In 2005, it was not com­mon at all to see com­pa­nies an­nounce even a $10 bln buy­back — let alone $20 bln. As re­cently as 2008, Proc­ter & Gam­ble had just over 3 bln shares out­stand­ing, and it now has closer to 2.7 bln.

With a Buf­fett deal for Du­ra­cell and with the com­pany di­vest­ing so many non-growth brands, it seems log­i­cal that the con­sumer prod­ucts gi­ant could look to shrink its float even fur­ther.

The earn­ings re­port from Jan­uary 2015 showed that it used $4.25 bln in 2014 and $4.0 bln in 2013 for share buy­backs. a com­pany that in­vestors think of for huge stock

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.