The Buyback Monitor – July 2010: Corporate Stock Buyback Profits of 275 Firms 2000-2010

56 Pages Posted: 6 Jul 2010

Date Written: July 6, 2010

Abstract

This report updates and expands earlier studies to look at the profitability of $349.7 billion of buybacks executed from 2000 through early 2010 by a sample of 275 corporations. The sample companies, drawn mainly from the technology sector, enjoy total equity market value today of $945.6 billion.

In the past decade, 67.3% of sampled companies engaged in buybacks. 35.7% of sampled corporate stock buyback programs are currently profitable (64.3% are unprofitable). Without buybacks, share prices for the group now would be at least 5.3% higher (nearly 10% higher after adjustment for foregone interest income). In part because buybacks by less numerous larger companies did better than those of more numerous smaller companies, the typical company suffered a bigger stock price penalty from losses on buybacks in the past decade than the group overall.

Companies with equity market value at least near $1 billion who, priced today, executed the most profitable buybacks during the past decade include, in rank order, CRUS, CY and CTXS. Shareholders of each of these companies received a stock price benefit of at least close to 20% due to corporate profits on buybacks. Other major companies whose buyback profits boosted share prices by at least close to 10% include POWI, ADSK, FLIR, STEC, ORCL, EMC, APKT, OVTI, ARRS and NTAP.

Companies with equity market value at least near $1 billion who, priced today, executed the most unprofitable buybacks during the past decade include, in rank order, CDNS, DELL, IDTI, NSM, ISIL, MOT, MXIM, KLAC, and AMAT. Absent buybacks, share prices of these firms today would be at least 21% to 98% higher. Buyback losses of a few, smaller companies (ZLC, ENTN, DITC, ADPT) inflicted even greater damage on share prices.

Keywords: Stock repurchase, stock buyback, share buyback, 10b-18, 10b5-1, Cypress, CRUS, CTXS, POWI, ADSK, FLIR, STEC, ORCL, EMC, APKT, OVTI, ARRS, NTAP, CDNS, DELL, IDTI, NSM, ISIL, MOT, MXIM, KLAC, AMAT, ZLC, ENTN, DITC, ADPT

JEL Classification: G35, G30, M40, M41, G34, G32

Suggested Citation

Gumport, Michael A., The Buyback Monitor – July 2010: Corporate Stock Buyback Profits of 275 Firms 2000-2010 (July 6, 2010). Available at SSRN: https://ssrn.com/abstract=1635485 or http://dx.doi.org/10.2139/ssrn.1635485

Michael A. Gumport (Contact Author)

MG Holdings/SIP ( email )

Summit, NJ 07901
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
179
rank
165,086
Abstract Views
13,393
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information