Apple is ready to spend some cash. On Tuesday the company said it will buy back an additional $50 billion worth of its own stock. That expands its share repurchase program to $60 billion, from $10 billion, and is the largest buyback authorization in history. The amount represents approximately 16 percent of the outstanding shares.
The maker of iPhones and iPads expects to complete the repurchases by the end of 2015.
It's welcome news for Apple investors who have been frustrated by the stock's steep decline. Apple closed at $408 Thursday, down 42 percent from an all-time high of $705 in September.
Stock buybacks can benefit investors because they reduce the number of shares outstanding, which automatically increases earnings per share. But financial analyst Kevin Pleines of Birinyi Associates found that the benefits of repurchase plans valued at $15 billion or more have been inconclusive. Of the 24 repurchase announcements he studied, only 13 helped the company's stock outperform the Standard & Poor's 500 index over the next 12 months — by an average of 1 percent.
Companies in the S&P 500 authorized $208 billion in stock buybacks in the first quarter of this year. It was the strongest start of the year, in dollar terms, since Birinyi Associates began tracking buyback data in 1985. At the current pace, buybacks would exceed last year's total of $477 billion by almost 75 percent.Associated Press