This week, I will run you through the most important buyback announcements for the week of April 9 - 13, which turned out to be a quiet week in terms of activity.
While consumers and governments across the world are strapped for cash, corporations have plenty. Rather than signal long-term trust and pay more generous long-term oriented dividends, many of them have adopted share repurchases to buy back their own stock. Investors welcome these announcements as they boost earnings per share and provide a lot of support for the share price during the repurchase periods.
Adobe Systems (ADBE) the largest producer of graphic-design software, plans to buy back $2 billion of its own shares through the end of 2015. The plan is sufficient to retire about 12.1% of shares outstanding based on Adobe's current valuation of $16.5 billion. The announcement is welcomed by investors who currently receive no dividends. The timing of the repurchase is a little dubious as shares have already returned 17% this year, but still trade 30% below their all time highs of $48 in 2007. Since 2008, the company has already repurchased some 9% of its outstanding shares.
During the last week, there was only one repurchase announcement made by Adobe totaled $2 billion, which makes this week a really quiet week in terms of buyback activity.
Cash-rich companies still refuse to significantly raise long-term dividends. Rather, they use one-time repurchase agreements with far less signaling power as a dispersion tool of excess cash to their shareholders.