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Comment by totalZero | Hacker News Reader

Apple spent something like a half-trillion on share buybacks. They could have averted this crisis a decade ago by thinking strategically. They didn't. Why give them credit where little or no credit is due?

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>Apple spent something like a half-trillion on share buybacks. They could have averted this crisis a decade ago by thinking strategically.

I don't understand the fixation on this. Share buybacks strengthen the stock price of the company, which the company can leverage in the future to raise more capital if needed (by re-releasing new shares to the market). From that perspective, they are better than dividends.

Besides, right now, Apple isn't strapped for cash as they have around ~50 billion on-hand and could raise more if they wanted to. So Apple can still invest more in fab processes if that's what they want.

"Share buybacks strengthen the stock price of the company, which the company can leverage in the future to raise more capital if needed (by re-releasing new shares to the market). From that perspective, they are better than dividends."

You are confused. A 100 dollar company with 100 shares outstanding, each worth 1 dollar, is not better able to raise capital than a 100 dollar company with 50 shares outstanding, each worth 2 dollars.

And even if it were a reverse stock split can convert the former to the latter.

In the case where there are 50 shares outstanding and each are worth 2 dollars, that would be true, but if there's a constant appetite for the public to invest in a company and a diminished number of shares, that would drive up the price.

That might be how you imagine the stock market works based on first principles but Investopedia tells us

"The most liquid stocks tend to be those with a great deal of interest from various market actors and a lot of daily transaction volume. Such stocks will also attract a larger number of market makers who maintain a tighter two-sided market."

https://www.investopedia.com/terms/l/liquidity.asp

In other words the more appetite for the stock, the more liquid the stock, and therefore the easier it is for a buyer to acquire the stock. This is presumably because stock market indexes will refuse to include an illiquid stock, meaning there will be less demand for the stock, and the stock price will drop.

Apple did a 4 for 1 stock split in 2020. Do you really think they screwed over their investors because you know something they don't about how stocks are valued?

> From that perspective, they are better than dividends

This is kinda circular when you think about it. 'Strengthening the stock price' is just artificial scarcity, and incentivizes further financialization (by incentivizing borrowing with the stock as collateral) rather than simply distributing the profit or reinvesting it.

Buybacks are not stopping apple from building a fab. They still have more than enough money, they're just not interested.

Do you mean Apple should’ve built a fab instead of spending on buybacks?

They should have built out solar and wind power generation capacity to displace ongoing CO2 emissions, instead of wasting the capital on buybacks.

Buybacks are value neutral. In fact since Apple’s stock price is up, it “made money” on them.

And they did that too: https://www.apple.com/environment/

In 2008 Apple wasn't even in the top 15 US companies by market cap. Now they're the largest US company by quite a margin.

The data says their approach was correct.

The data says their approach worked for them, but not necessarily for their customers, who regularly are made to shoulder indignities other companies do not dare to impose.

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