An examination of Apple’s buyback strategy in relation to its net cash neutral goal.

Written by Neil Cybart

Apple has the largest share buyback program in the world. With $90 billion put into buyback in just the past 12 months, the company’s buyback strategy continues to draw questions.

What is Apple’s ultimate objective in repurchasing shares?
What will happen to Apple’s buyback program once the company reaches its net cash neutral goal?

This report examines Apple’s share repurchase program, including the technical details and mechanisms behind buyback, the motivating factors for continued share repurchases, and the most likely path forward from a capital management perspective once Apple reaches its net cash neutral goal.

What Are Share Repurchases?

Share repurchases are the reverse mechanism of a company issuing stock. A company’s board of directors authorizes the use of cash on the balance sheet to buy back shares from existing shareholders. In most cases, repurchased shares are retired and taken out of circulation, thereby reducing a company’s share count.

Technical Details

There are three ways for a company to buy back shares:

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