Recently Tim Cook mentioned in an interview with the WSJ that Apple has bought more than $14 billion worth of its own shares after they dropped almost 8% (or around $50 per share), thanks to an over-reaction of the market to Apple's recent quarterly financial results (apparently due to lower than expected 51 million iPhones sold). Ashraf Eassa of Seeking Alpha [via MacDailyNews] weighs in on his thoughts on this buy back by Apple.
His thoughts are that since Apple bought back its own shares after a huge drop in its value and new product announcements from Apple are on the way (iWatch, the new Apple TV 2.0, and what else?), the stock is only bound to rise in 2014 and not go lower (unless of course the market again over-reacts on a lack of "new" product category). Hence Apple would have bought $14 billion of its own shares at around $500 per share and say the share rises to $600 per share after the new products are announced, they would have made a $100 per share profit by buying their own shares or its a nice way for Apple to make some money from the money (around $160 billion cash pile) that is just sitting around!
Is this what Tim Cook meant when he said that Apple and him have extreme confidence in Apple doing well, in the WSJ interview? According to this SeekingAlpha post, if indeed this was the rationale behind Apple buying this huge amount of its own stocks and was just not to shut up some greedy investor (cough cough Carl Icahn), then (apparently) it is a brilliant move by Tim Cook and Apple. Whether or not this is a too simplistic view on such a huge financial decision ($14 billion worth shares buyback) by Apple (in such a short time)only time and AAPL in 2014 will tell!