S&P 500 Stock Buybacks Decrease in Third Quarter

Thu Dec 27, 2012 10:00am EST

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Company Buyback Activity Erratic in Q3; Mixed Results Seen for Q4
NEW YORK,  Dec. 27, 2012  /PRNewswire/ -- S&P Dow Jones Indices announced today
that preliminary results show that S&P 500 stock buyback activity decreased 7.2%
to  $103.7 billion  during the third quarter of 2012, a decrease from the 
$111.7 billion  spent on buybacks during the second quarter of the year. Through
the third quarter of this year, companies have spent  $17.7 billion  less on
buybacks than through the third quarter of last year.  

"Company buyback activity has been erratic over the past three months," says 
Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "Given the
continued uncertainty of the fiscal cliff and the potential impact on spending,
companies may have taken a cautious approach to stock buybacks in the fourth
quarter.  In the background, however, is some talk of companies needing more
shares to meet employee options, with more being exercised near year-end due to
the anticipated tax change."  

Of significance during the third quarter was Johnson & Johnson's  $12.2 billion 
share repurchases, ranking as the highest expenditure for the quarter. Johnson &
Johnson's share repurchases ($12.9 billion) was also ranked the highest during
the second quarter. Both periods included the buybacks associated with the
Synthes and Express Scripts merger.  

Buybacks have become top heavy over the past year, with the top 20 issues
accounting for 38.0% of the total buyback expenditure in the third quarter of
last year, as compared to 53.4% in the current period. "Still companies are
broadly participating, with 258 issues reducing their overall diluted share
count (buybacks less issuance), and 192 increasing (in Q3)," adds Silverblatt.
"More relevant is that 125 issues reduced their count by at least 1%, while only
23% increased it by at least 1%."

On a sector basis, Silverblatt notes that S&P 500 Health Care issues dominated
the quarter with  $21.8 billion  in buybacks (down from  $23.8 billion  during
the second quarter), with Information Technology second with  $18.0 billion  in
buybacks, compared to  $21.6 billion  last quarter.  Energy reduced their
expenditures to  $6.5 billion  during the third quarter from  $10.7 billion.

For the fourth quarter of 2012, Silverblatt sees mixed results for buybacks, as
companies react to the uncertainty over policy, but act to protect their EPS.
"At this point, 2013 has a base of buybacks needed to cover stock options, many
of which are solidly in the money. The determining factor will be the market and
the need for shares.  If the uncertainty clears up, companies will need more
shares (and expenditures) to cover options, as well as more for M&A, which is
expected to follow a more stable economy."   

Historical S&P 500 buyback data can be found at: 
www.marketattributes.standardandpoors.com.

 S&P Dow Jones Indices                                                                
 S&P 500, $ U.S. BILLIONS                                                             
 PERIOD              MARKET         AS REPORTED                          DIVIDEND &  
                     VALUE          EARNINGS     DIVIDENDS   BUYBACKS    BUYBACK     
                     $ BILLIONS     $ BILLIONS   $ BILLIONS  $ BILLIONS  YIELD       
 09/28/2012 Prelim.  $12,881        $189.64      $69.48      $103.72     5.08%       
 6/30/2012           $12,303        $195.27      $67.31      $111.75     5.35%       
 3/31/2012           $12,730        $208.15      $64.07      $84.29      5.09%       
 12/31/2011          $11,385        $186.76      $65.89      $87.59      5.67%       
 09/30/2011          $10,303        $206.08      $59.20      $118.41     6.14%       
 6/30/2011           $12,021        $202.44      $59.03      $109.24     4.88%       
 3/31/2011           $12,068        $195.15      $56.08      $89.84      4.52%       
 12/31/2010          $11,430        $187.67      $54.85      $86.36      4.42%       
 09/30/2010          $10,336        $176.80      $51.26      $79.56      4.45%       
 06/30/2010          $9,323         $178.00      $50.44      $77.64      4.41%       
 03/31/2010          $10,560        $157.85      $49.28      $55.26      3.36%       
 12/31/2009          $9,928         $135.14      $49.04      $47.82      3.36%       
 09/30/2009          $9,337         $130.37      $47.21      $34.85      3.71%       
 06/30/2009          $8,045         $118.22      $47.63      $24.20      5.17%       
 03/31/2009          $6,928         $65.29       $51.73      $30.78      7.13%       
 12/31/2008          $7,852         -$202.11     $62.19      $48.12      7.48%       
 09/30/2008          $10,181        $86.16       $61.44      $89.71      6.73%       
 06/30/2008          $11,163        $112.15      $61.94      $87.91      6.88%       
 03/30/2008          $11,511        $135.24      $61.72      $113.90     7.25%       
 12/31/2007          $12,868        $68.53       $67.09      $141.71     6.49%       
 09/30/2007          $13,470        $133.66      $61.21      $171.95     5.89%       
 06/30/2007          $13,350        $194.30      $59.76      $157.76     5.44%       
 03/31/2007          $12,706        $190.75      $58.53      $117.70     5.35%       
 12/31/2006          $12,729        $181.65      $61.79      $105.18     5.16%       


 S&P Dow Jones Indices                                                              
 S&P 500 20 LARGEST Q3 2012 BUYBACKS, $ MILLIONS                                     
 Company                       SECTOR                      Q3,'12    BUYBACKS       
                                                                     Q3,'12-Q4,'04  
 Johnson & Johnson             Healthcare                  $12,183   $51,512        
 Exxon Mobil                   Energy                      $8,000    $20,855        
 ConocoPhillips                Energy                      $5,098    $189,716       
 Intl Bus. Machines            Information Technology      $3,751    $29,810        
 AT&T                          Telecommunication Services  $3,076    $23,883        
 Oracle Corporation            Information Technology      $2,986    $93,018        
 Wells Fargo & Company         Financials                  $2,584    $61,859        
 American International Group  Financials                  $2,003    $15,924        
 Cisco Systems                 Information Technology      $1,835    $32,899        
 Wal-Mart Stores               Consumer Staples            $1,775    $42,596        
 American Express Company      Financials                  $1,632    $105,855       
 Philip Morris International   Consumer Staples            $1,498    $25,840        
 The Coca-Cola Company         Consumer Staples            $1,250    $39,804        
 The Goldman Sachs Group       Financials                  $1,228    $42,158        
 The Home Depot                Consumer Discretionary      $1,216    $22,327        
 JPMorgan Chase & Co           Financials                  $1,175    $49,141        
 Intel Corporation             Information Technology      $1,122    $24,827        
 DIRECTV                       Consumer Discretionary      $1,009    $20,266        
 Pfizer                        Healthcare                  $1,004    $14,564        
 News Corporation              Consumer Discretionary      $973      $28,633        
 Top 20                                                    $55,398   $935,487       
 S&P 500                                                   $103,722  $2,917,536     
 Top 20 % of S&P 500                                       53.41%    32.06%         


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SOURCE  S&P Dow Jones Indices


David R. Guarino, Communications, S&P Dow Jones Indices, +1-201-755-5334,
dave_guarino@spdji.com, or Howard Silverblatt, Senior Index Analyst, S&P Dow
Jones Indices, +1-212-438-3916, howard_silverblatt@spdji.com
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