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they literally don't have ways to use the profits to make more successful tech products

And yet they haven’t updated their pro line since 2012. And the quality of OSX is slipping badly. If they are really bereft of ideas, spending a few billion on fixing bugs (instead of the animated poop icon) might keep them occupied until inspiration strikes

>And yet they haven’t updated their pro line since 2012. And the quality of OSX is slipping badly.

But these are subjective measures (to which I happen to agree with you). It's not as if they aren't investing in their products.

They could fix the damn MBP keyboard...

Maybe they can buy them back!

The reason buybacks are disconcerting (aside from the debt driven buybacks the article focuses on) is precisely because of what you're saying.

Buybacks are often a signal that a company has run out of ideas for what to do with with their money, other than what they're already doing. Especially for a tech company, that's a very bad sign. For instance you refer to Apple as a mature company yet the interesting thing is that today they are basically 'the iPhone company' - making the wide majority of their profits from a product type that didn't exist 11 years ago. And this is a typical pattern with tech and electronics. Times and trends change very quickly and the winner tends to be the company that's on top of the change. If Apple doesn't manage to move beyond the iPhone they will stagnate (which is arguably already happening) and inevitably decline.

Buybacks often don't creat value for shareholders though. When a stock is trading for more than its intrinsic value, buybacks destroy value.

Buffett/Berkshire is literally the only example I can think of where they only buyback shares when prices drop below a certain threshold. Most companies do it regardless of whether it is creating or destroying value, based only on whether they have cash authorized to spend.

You could argue the market is efficient and therefore always trades at the intrinsic value - on average. This view has more following among economists. Although if your CEO happens to also be the most legendary stock picker of our time then I'd let him time the market.

Who's to say what the intrinsic value is though? If you have an opinion on that you should be trading on it until the value comes in line and at that point buybacks are fine.

Buybacks tend to happen at the worst times (boom years) and cut out in recessions which is counter to what you'd want as an investor. Though if you think of it more as an alternative to special dividends it makes more sense.

They aren't saying there's a clearly readable intrinsic value for any given company, only that there is some intrinsic value, and that prices can float both below and above it. When they do, buybacks destroy value. Obviously, management will always have some argument to support the higher value implied by a buyback (it could hardly be otherwise, unless you think management could with a straight face argue that they should overpay for their own stock). When they guess wrong --- and they're clearly incentivized to guess high --- they cause problems.

The thing is, if management is wrong about the price, aren't the shareholders wrong too?

It doesn't make sense for shareholders to own stock that they think will go down. If they really think that, they should sell. So shareholders should think the stock is either fairly valued or undervalued, almost by definition.

Any shareholders who don't sell during a buyback are compensated by owning a larger share of the company at what should be considered a fair or generous price from their point of view.

The place where this breaks down is when you believe a company would have a higher intrinsic value, provided that it has sufficient financing. But this isn't based on the stock price; it's based on your theory of how much money you think the company will need.

Also, from a non-shareholder's point of view (say, bondholders), a buyback means the company's ownership changed, it has less cash, and they didn't get anything for it.

Returning money to shareholders doesn't create or destroy value; it just moves it. No money is created or destroyed, and nothing else changes either. Whatever intangibles the company has are still there.

> Most companies do it regardless of whether it is creating or destroying value, based only on whether they have cash authorized to spend.

Do you have evidence of this? Shareholders vote on what to do with the corporation's money. I would expect the vast majority of those decisions to be rational.

> When a stock is trading for more than its intrinsic value

If that is a shareholder's opinion, they should sell the stock.

On the tax side, I enjoy being able to time my gains/losses, instead of paying taxes every year.

Also, as a foreigner, I have tax withheld by the IRS on US sourced income, but I do not on capital gains (except through my retirement account due to tax treaties).

Yep, Apple also has tons of cash reserves, so taking on debt doesn't really matter for them.

And they were taking on debt as a work around for double taxes on foreign income. At crazy low rates because they are not a credit risk whatsoever. It was basic accounting.