Investing

December's $30B+ Buybacks Set Stage for 2011 Bonanza (BBBY, PRE, T, BAX, CB, CSC, BEN, HD, BEN, HD, INTC, TEVA, GE, CSCO)

Share repurchase programs, or stock buybacks, have been and may always be a more questionable method of returning capital to shareholders than dividends.  Many even disagree with the effect of buybacks.  Still, many boards inside corporate America prefer the buyback method.  December almost felt like an all-time record for additional share buyback announcements.  The tally came to well over $30 billion in updated buyback announcements from a couple dozen companies.  The long and short of the matter is that this trend will set the tone for a steady flow of corporate spending to retire outstanding shares.

At the end of December came a $2 billion buyback update from Bed Bath & Beyond, Inc. (NASDAQ: BBBY) versus a market cap of more than $12 billion.  PartnerRe Ltd. (NYSE: PRE) announced a 7 million share repurchase plan that comes to more than $550 million at the current prices versus a market cap of about $6 billion.  Some other key buybacks announced were as follows:

AT&T Inc. (NYSE: T) announced that it would repurchase as many as 300 million shares, worth some $8.7 billion at the time.  That was about 5% of its shares against a $171 billion market cap at the time.

Baxter International Inc. (NYSE: BAX) in the middle of the month approved a share repurchase authorization of up to $2.5 billion in common stock; it had approximately $600 million remaining under its July-2009 $2.0 billion share repurchase program.  Baxter’s market cap was $29 billion at the time.

Chubb Corporation (NYSE: CB) added an additional 30 million shares for buybacks for nearly $1.8 billion against a market cap of nearly $18 billion at the time.

Computer Sciences Corporation (NYSE: CSC) had announced a buyback plan of up to $1 billion compared to a market cap of close to $7.5 billion at the time.

Franklin Resources Inc. (NYSE: BEN) added to its prior plan saying it would buy back up to 10 million shares, over $1 billion if fully allocated, against a market cap of roughly $25 billion.

The Home Depot, Inc. (NYSE: HD) targeted some $2.5 billion in share buybacks ahead in 2011 versus a market cap of roughly $56 billion at the time.

Franklin Resources Inc. (NYSE: BEN) last week added to its prior plan and announced that it would buy back up to 10 million shares.  With shares over $100 a piece, that is over $1 billion if fully allocated and that is against a market cap of roughly $25 billion.

The Home Depot, Inc. (NYSE: HD) said earlier that the home improvement supply giant is targeting some $2.5 billion in share buybacks ahead in 2011 versus a market cap of roughly $56 billion.

Intel Corporation (NASDAQ: INTC) CEO Paul Otellini announced that it resumed repurchasing common stock after having previously suspended buybacks during the Great Recession.  Intel had roughly $5.7 billion remaining under an existing $25 billion buyback plan.  Intel’s market cap was more than $120 billion at the time.

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) announced in early December that it would spend up to $1 billion to repurchase shares against a market cap of roughly $47 billion.

Two large restarted buyback plans right before December were General Electric Co. (NYSE: GE) starting to buy shares again and a promise for more share repurchases in 2011 and another giant plan from Cisco Systems, Inc. (NASDAQ: CSCO) adding some $10 billion to its buyback plan.

The full list of December buybacks can be seen here with many more plans being in the hundreds of millions of dollars or even higher.

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JON C. OGG

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