S&P 500 Fourth Quarter Buybacks Rebound 37%; Post 59.5% Decline in 2009
Authorizations Pickup, But Actions Remain Low
NEW YORK, March 29 /PRNewswire/ -- Standard & Poor's, the world's leading index provider, announced today that preliminary results show that S&P 500 stock buybacks for the fourth quarter of 2009 increased 37.2% to $47.8 billion from the $34.8 billion registered during the third quarter of 2009. For all of 2009, preliminary data shows that S&P 500 buybacks declined 59.5% to $137.6 billion (from the $339.6 billion posted in 2008), and are off 76.6% from the record annual high of $589.1 billion posted in 2007.
"Companies are getting back in the buyback mode, with many boards reauthorizing buybacks but adding that actions will be dictated by market conditions," says Howard Silverblatt, Senior Index Analyst at S&P Indices. "Increased activity in the fourth quarter was primarily the result of companies heading off possible earnings dilution due to an anticipated increase in the number of employee exercised stock options, which is currently being fueled by higher market prices."
"With market gains holding so far this year and S&P non-financials holding a record $831 billion in available cash at year-end, companies are very capable of controlling earnings dilution," continues Silverblatt. "While most have not shown an appetite to reduce share count and increase earnings-per-share in the manor they did in 2006 and 2007, we have seen notable share count reductions in over fifty S&P 500 issues in the fourth quarter, most notably in the Consumer Discretionary sector."
S&P Indices also determined that, during the fourth quarter of 2009, 214 issues participated in stock buyback programs, up from the 195 that did so in the third quarter and the 169 that participated in the second quarter. Additionally, for the third quarter in a row, none of the issues made the top 20 historical list for largest stock buybacks.
"At this point most companies appear to be more willing to commit their record cash holdings," adds Silverblatt. "The first quarter saw more companies increase their dividends, with eight issues having enough confidence in their future earnings to initiate a payment. Still, we're not out of the woods just yet. Markets and the economy remain less than stable, with many companies still not yet convinced that it is safe to come out and spend."
On a sector basis, S&P Indices notes that Information Technology now accounts for 31.9% of all buybacks, with Consumer Staples accounting for 20.7%. Both Energy and Telecommunications were the only sectors to reduce their Q4 buyback expenditures, with Exxon Mobil reducing their expenditures 44% to a level last seen in Q2 2004, but still posting its 38th consecutive quarter of share count reduction.
Historical S&P 500 buyback data can be found at: www.marketattributes.standardandpoors.com.
S&P Indices
S&P 500, $ U.S. BILLIONS
AS
PERIOD MARKET OPERATING REPORTED DIVIDEND &
VALUE EARNINGS EARNINGS DIVIDENDS BUYBACKS BUYBACK
$ $ $ $ $
BILLIONS BILLIONS BILLIONS BILLIONS BILLIONS YIELD
2009 $8,559 $488.49 $445.29 $195.61 $137.64 3.89%
2008 $10,177 $435.18 $131.43 $247.29 $339.65 5.77%
2007 $13,098 $731.38 $587.24 $246.58 $589.11 6.38%
12/31/2009 P $9,928 140.49 $131.41 $49.04 $47.82 3.36%
09/30/2009 $9,337 $139.37 $130.37 $47.21 $34.85 3.71%
06/30/2009 $8,045 $120.85 $118.22 $47.63 $24.20 5.17%
03/31/2009 $6,928 $87.78 $65.29 $51.73 $30.78 7.13%
12/31/2008 $7,852 -$0.78 -$202.11 $62.19 $48.12 7.48%
09/30/2008 $10,181 $142.90 $86.16 $61.44 $89.71 6.73%
06/30/2008 $11,163 $148.43 $112.15 $61.94 $87.91 6.88%
03/30/2008 $11,511 $144.63 $135.24 $61.72 $113.90 7.25%
12/31/2007 $12,868 $133.38 $68.53 $67.09 $141.71 6.49%
09/30/2007 $13,470 $184.13 $133.66 $61.21 $171.95 5.89%
06/30/2007 $13,350 $213.65 $194.30 $59.76 $157.76 5.44%
03/31/2007 $12,706 $200.23 $190.75 $58.53 $117.70 5.35%
12/31/2006 $12,729 $197.35 $181.65 $61.79 $105.18 5.16%
S&P Indices
S&P 500 SECTOR
BUYBACKS
SECTOR $ (high) Q4,'09 FULL Q4,'09
MILLIONS Q4,'09 Q3,'09 Q4,'08 Q3,'07 CHG OVR 2009 CHG OVR
Q3,'09 CHANGE Q3,'07
Consumer
Discretionary $5,146 $4,560 $1,847 $34,902 12.86% -58.38% -85.25%
Consumer
Staples $9,900 $6,699 $4,627 $16,088 47.78% -31.20% -38.46%
Energy $2,655 $4,520 $11,809 $14,717 -41.27% -65.90% -81.96%
Financials $3,142 $2,108 $4,292 $27,762 49.05% -76.16% -88.68%
Healthcare $7,512 $3,414 $5,453 $18,660 120.02% -38.83% -59.74%
Industrials $2,843 $2,026 $7,524 $17,521 40.35% -79.20% -83.77%
Information
Technology $15,253 $10,535 $10,968 $23,904 44.78% -54.84% -36.19%
Materials $365 $223 $1,433 $6,503 63.79% -86.04% -94.38%
Telecommun-
ication
Services $117 $139 $87 $3,947 -16.06% -96.90% -97.04%
Utilities $885 $624 $79 $7,943 41.80% -32.86% -88.86%
TOTAL $47,818 $34,848 $48,117 $171,947 37.22% -59.47% -72.19%
S&P Indices
S&P 500 20 LARGEST Q4 2009 BUYBACKS, $ MILLIONS, CURRENT MEMBERSHIP
COMPANY SECTOR Q4,'09 Q4,'04-Q4,'09
Information
Microsoft Corp Technology $3,867 $81,777
Int'l Business Machines Information
Corp Technology $3,064 $53,609
Information
Hewlett-Packard Co Technology $2,713 $39,653
Exxon Mobil Corp Energy $2,372 $138,754
Wal-Mart Stores Inc Consumer Staples $2,171 $20,231
The Travelers Co Financials $1,539 $9,599
The Coca-Cola Co Consumer Staples $1,512 $9,173
Procter & Gamble Co Consumer Staples $1,406 $44,643
Information
Cisco Systems, Inc Technology $1,375 $40,506
Philip Morris
International, Inc Consumer Staples $1,367 $10,881
Amgen Inc Healthcare $1,211 $18,030
Johnson & Johnson Healthcare $958 $23,226
CVS Caremark Corp Consumer Staples $938 $7,870
WellPoint Inc Healthcare $827 $16,951
Biogen Idec Inc Healthcare $694 $5,160
Zimmer Holdings Inc Healthcare $519 $3,040
Consumer
Lowe's Companies Inc Discretionary $500 $5,298
St. Jude Medical Inc Healthcare $500 $3,000
The Chubb Corp Financials $496 $5,944
Lockheed Martin Corp Industrials $489 $10,603
Top 20 $28,518 $547,948
S&P 500 $47,818 $1,951,627
Top 20 % of S&P 500 59.64% 28.08%
About S&P Indices
S&P Indices, the world's leading index provider, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1 trillion is directly indexed to Standard & Poor's family of indices, which includes the S&P 500, the world's most followed stock market index, the S&P Global 1200, a composite index comprised of seven regional and country headline indices, the S&P Global BMI, an index with approximately 11,000 constituents, and the S&P GSCI, the industry's most closely watched commodities index. For more information, please visit www.standardandpoors.com/indices
About Standard & Poor's
Standard & Poor's, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com.
SOURCE Standard & Poor's
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