Apple: No share buyback is a good thing

March 06th, 2008 | Category: Forecasts, Apple

Apple (NASDAQ: AAPL) announced that week it would not use its $20 billion cash hoard for dividend or share buyback in the open market. Some thought that was a good move, some, a mistake. Let me add my voice to those who agree with Apple’s management decision.

Apple has been a rocket ship these past three to four years, rising from $12 to by $200 on the strength of popular consumer products. Recently, the company guided to the low end of the Street expectations for the March 31t quarter, and the stock has sold off nearly 35%. So, would a share buyback really help? No, I don’t think so and here’s why.

Like most superbly

run companies, Apple is a victim to a slowing economy. There would have been no gain to Apple had it maintained its March quarterly estimates in tact. No gain from being gallant here in that environment. Apple took the occassion to re-set the already raised bar on its expecations. Apple had beaten expectations five of the final six quarters, and analysts were raising the bar habitually. With the share price having suffered in January from the market’s selloff, Apple took the opportunity to re-set its own bar.

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Original post by Georges Yared

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