Billed as “Apple’s greatest acquisition ever”, it has emerged that in the last quarter, Apple spent $16 billion on 36 million shares in its own company, valued at around $444 each.
A report from Fortune, calculated by Philip Elmer-Dewitt, suggests that Apple spent $4 billion from its massive cash reserves, and another $12 billion from its “accelerated share repurchase program”. Most of the share were retired in Q3, leaving Apple with around 908 million outstanding shares.
Apple is doing this to reduce the number of shares available on the market, which means that investors will actually have a larger stake in the company, because there will be less investors to claim Apple’s earnings.
Not only is the move beneficial for investors, it also highlights Apple’s confidence in its future products, which it clearly believes will boost its stock prices.
Reports claiming Apple has reduced iPhone 5 parts orders in the face of weaker than expected demand caused Apple stock to briefly drop below $500 Monday morning, as traders reacted to the news.
Seen above – The price of Apple stock at the time of this article.
AAPL shares were down nearly 4 percent before the market opened, a hit that came after both The Wall Street Journal and Nikkei issued reports claiming that Apple had slashed iPhone 5 component orders due to weak demand. The company is said to have cut “roughly half” of its orders for the 4-inch display on its latest smartphone, and also initiated a drawdown on other components in the current quarter, which concludes in March.
This comes just over a week before Apple is set to announce their earnings for the December quarter. Sales of Apple products are expected to be record setting. Analyst have had high expectations for the iPhone in particular, with some expecting sales of 50 million.
Apple’s stock has fell nearly 17% over the last three months, with word that investors are concerned about Apple’s gross margins in 2013, with additional concerns voiced about the company’s growth potential.
The company’s high point came in the middle of September, as its stock briefly hit more than $700 per share.