November's Billions & Billions of Stock Buybacks (AMD, BDX, CSCO, DPS, FDO, GOOG, GPS, HPQ, MRK, NOC, RAH)

You might think that companies tend to repurchase fewer and fewer shares in their share buyback plans when shares rise and rise.  When you compare the moves from the March 9 close, the price moves seem astronomical.  Yet many shares are still under or close to where they were a year ago, and this seems to be keeping the flow of stock buyback announcements steady.  We have tracked the major buyback announcements seen in November, and some are mere updates on what was reported along with the earnings reports seen this month.

Advanced Micro Devices, Inc. (NYSE: AMD), Becton Dickinson (NYSE: BDX), Cisco Systems, Inc. (NASDAQ: CSCO), Dr. Pepper Snapple (NYSE: DPS), Family Dollar Stores, Inc. (NYSE: FDO), Google Inc. (NASDAQ: GOOG), Gap Inc. (NYSE: GPS), Hewlett-Packard Co. (NYSE: HPQ), Merck & Co. (NYSE: MRK), Northrup Grumman Corporation (NYSE: NOC), and Ralcorp Holdings Inc. (NYSE: RAH) were just some of the big buybacks from the month of November.  In order to avoid any order issues, these have been listed in alphabetic order.

Advanced Micro Devices, Inc. (NYSE: AMD) is an odd buyback because of the catalyst being the $1.25 billion settlement paid from Intel Corporation (NASDAQ: INTC). The company announced a $500 million note offering and also said it buy back up to $1 billion in common stock and would redeem up to $1.4 billion in debt.

Becton Dickinson (NYSE: BDX) announced just last week that it plans to purchase up to 10 million shares of common stock, even though the stock is almost at 52-week highs and in the middle of the highs and lows of the last few years.  This is not a new buyback plan, and added to prior plan which still left authorization for 7.6 million shares.  That represents close to 6 days worth of trading volume, yet is not quite 5% the outstanding shares.  BD also raised its dividend by $0.04 to $0.37 per quarter.

Cisco Systems, Inc. (NASDAQ: CSCO) was one of the first huge announcements in the month of November.  The company set aside $10 billion for share buybacks, and it has previously authorized $62 billion in buybacks.  This takes the real remaining amount to about $13.1 billion for new buybacks.

Dr. Pepper Snapple (NYSE: DPS) decided it better get on the act of returning to shareholders even though its stock is effectively very close to the post-spin-off highs.  It announced a buyback of up to $200 million and started a dividend of $0.15 per quarter.

Family Dollar Stores, Inc. (NYSE: FDO) announced a $400 million buyback plan in mid-November, which added to an existing buyback plan which still had about $62 million under authorization.  This is close to 10% of the company.

Google Inc. (NASDAQ: GOOG) is not exactly a normal buyback, and frankly seems one of semantics rather than a corporate change.  Eric Schmidt said that it would spend $750 million to repurchase shares to offset the dilution from the recent AdMob acquisition deal.  With $22 billion in cash and a $183+ billion market cap today, you might ask.. Why bother?

Gap Inc. (NYSE: GPS) is turning the ship around under its new management.  The company announced a buyback plan of up to $500 million, although the company will enter into agreements directly with members of the founding Fisher family to repurchase shares worth about $20 million.  The company noted that this took total buyback authorizations up to $7.25 billion since 2004.

Hewlett-Packard Co. (NYSE: HPQ) effectively tripled its share buyback plan. Mark Hurd continues to be shareholder friendly despite making acquisitions.  The new plan was expanded to up to $12 billion on top of the $3 billion (plus) deal to acquire 3Com.  H-P had almost $4 billion remaining of an existing $8 billion buyback plan.

Merck & Co. (NYSE: MRK) announced what felt to be a surprising buyback plan after its Schering-Plough buyback.  This was for a $3 billion on top of its dividend remaining the same despite the Schering-Plough add-on.  This is close to 3% of its outstanding shares.

Northrup Grumman Corporation (NYSE: NOC) added to its existing buyback plan.  In November the company said it was selling TASC for up to $1.6 billion, which will give net proceeds of close to $1.1 billion.  That is to be used for buying back shares.

Ralcorp Holdings Inc. (NYSE: RAH) announced a buyback of 7 million shares.  This might not sound like much, but it was close to 12% of its outstanding shares. The company also noted that it has completed over 20 acquisitions and repurchased 9.5 million shares over the past 12 years.

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Jon C. Ogg
November 30, 2009