What’s Important in the Financial World (9/20/2012)

Nike Buys Back Shares

Nike Inc. (NYSE: NKE) became the latest company to return money to shareholders as the economy falters. It joins a raft of firms from AOL Inc. (NYSE: AOL) to Microsoft Corp. (NASDAQ: MSFT) and Apple Inc. (NASDAQ: AAPL). Nike said it will buy back $8 billion worth of shares. The dividend and buy back activity of major companies has risen this year as more and more investors question what public firms with billions of dollars on their balance sheet should do if that cash has no immediate and apparent usefulness. Nike bragged about its record as a shareholder friendly company when it announced its:

Board of Directors has approved a new four-year, $8 billion program to repurchase shares of NIKE’s Class B Common Stock. The Company’s current $5 billion share repurchase program will be completed during the second quarter of fiscal 2013, and the new program will commence upon the completion of the current program.

“We believe repurchasing our shares is a prudent use of our cash and are pleased to extend NIKE’s track record of returning value to shareholders through sustained share repurchases,” said Mark Parker, NIKE, Inc. President and CEO. “Over the past 10 years, NIKE, Inc. has returned $10 billion to shareholders through the repurchase of more than 167 million shares. This new share repurchase program demonstrates our continued confidence in NIKE’s strategy to generate long-term profitable growth and strong cash flow, and reflects our commitment to delivering value to our shareholders.”

Apple Maps on the iPhone 5

As Apple Inc. (NASDAQ: AAPL) launches its new iPhone 5 without its traditional partnership with Google Maps, the future of the search engine’s software has dimmed. Google Inc. (NASDAQ: GOOG) has never quite explained why its Maps operation is a good business, at least from a sales and profits standpoint. In that way, Maps joins Android and all of Google’s other nonsearch products. It has been several weeks since it became clear that Apple had its own map product. However, Apple’s move could backfire. Early evaluations of its map technology have been almost universally poor. The New York Times writes:

On Wednesday, Apple released a software update for the iPhone that, among other changes, replaces the Google maps that have been on the phone since 2007 with Apple’s own maps. So far the feedback from reviewers and early adopters of the new software is that it is attractive but suffers from holes and glitches.

For example, some have found that searches for an in-town destination can pull up an entirely different city, and there is no built-in information about public transportation.

Japan’s Exports to Europe

Japan announced its trade data for August, and its export level to the European Union collapsed by 28% from the same month last year. If the data is any indication of Europe’s shrinking demand, the export problems of the United States and China almost certainly have worsened. The Financial Times reports:

For now, the world’s third-biggest economy cannot rely on earning its money back through exports. The provisional data from the ministry of finance showed that in August shipments to western Europe by 28 per cent from a year earlier, thanks to big falls in exports to Germany (18 per cent) and the UK (42 per cent). Exports to China, meanwhile, posted their third successive decline. August’s 10 per cent fall was only slightly better than a 12 per cent slump in July.

Douglas A. McIntyre