Share Buybacks Could Be Coming To An End
Another way the company goosed earnings per share was via share repurchases. During the quarter, management repurchased 112 million shares at a total cost of $6 billion.
https://seekingalpha.com/article/4273614-oracles-growth-question-mark
So with $36 Billion in share buybacks oracle is the second biggest buyer after Apple, is that right?
Note that Apple is much bigger than O both revenue wise and in terms of cash on hand.
http://money.com/money/5267940/companies-spending-trump-tax-cuts-stock-buybacks
"Here are some of the biggest stock buyback announcements so far in 2018, according to Kiplinger.
Apple – $100 billion
Cisco – $25 billion
Wells Fargo – $22.6 billion
Pepsi – $15 billion
AbbVie – $10 billion
Amgen – $10 billion
Google parent Alphabet – $8.6 billion
Visa – $7.5 billion
eBay – $6 billion
Investors can expect even bigger buybacks after the first half of the year ends, says Silverblatt."
Microsoft is also buying back shares:
https://www.fool.com/investing/2018/12/30/3-tech-companies-that-are-spending-billions-to-buy.aspx
Amazon is not buying back shares.
Most of these other companies are not buying back shares to prop ion their EPS in view of stagnant revenues and profits - that’s the big difference between them and O, and as we know the market has noticed and is questioning where this is heading. Also as we know, O’s overall market capitalization lags way behind those of other tech companies’
awesome balance sheet...$67 Billion in cash and equivalents 12 months ago and NOW only $38 Billion.
That is what it should look like after about $30B in buybacks. Long term debt is unchanged. Total liabilities are down $5B. Many other companies are borrowing to fund buy backs, O isn't.
The cash flow statement is more telling, The net change in cash in FY 2019 was almost -$1B. The common preferred redeemed row shows the buy backs:
2016 2017 2018 2019
Common Preferred Redeemed -10.5B -3.8B -11.9B -36.6B
I expect that in 2020 it will drop back to the $10B. O basically used the money it was able to repatriate thanks to the new tax breaks to fund the extra buy backs in 2019.
I agree that buy backs are a poor way to spend money. R&D would be a better way. But O's balance sheet isn't in disarray. Many firms are borrowing because the historically low interest rates make the cost of servicing such debt much lower than what it would be with normal interest rates, Corporate America is about $10T in debt.
awesome balance sheet...$67 Billion in cash and equivalents 12 months ago and NOW only $38 Billion.
O still makes $10B a year profit, so they can still buy back shares. Perhaps not at the previous pace, but they still can.
Yea and is making a great case as to why people should avoid the place like the plague. Who wants to work with guys like that?