From Jeff Reeves at marketwatch.com:
Another earnings season, another load of massive stock-buyback announcements.
In the past few weeks alone, we saw:
• A $4 billion boost to General Motors’ GM, +0.57% stock-buyback plan, bringing the total $9 billion.
• A new $4 billion buyback plan from MasterCard MA, -0.84%
• A new $10 billion buyback program at battered oil company Schlumberger SLB, -2.30%
The repurchase amounts are big, and they are only getting bigger.
“Among the 1,900 companies that have repurchased their shares since 2010, buybacks and dividends amounted to 113% of their capital spending, compared with 60% in 2000 and 38% in 1990,” Reuters said in a recent special report on the buyback craze.
You would think that with all that cash being plowed into stock buybacks, investors would be reaping the rewards. But, sadly, more often than not, the buybacks are simply a waste of money as shares are bought at inflated values, diluted by employee stock awards and ultimately come at the cost of growth and innovation.
Here’s why stock repurchases are good for nothing, and why companies like Apple AAPL, -1.04% Cisco CSCO, -1.95% and IBM IBM, +0.16% need to wake up and stop wasting their money on buyback boondoggles.
To continue reading: Apple, Cisco And IBM Prove That Stock Buybacks Are a Sham