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Press release from PR Newswire

S&P 500 Stock Buybacks Decrease in Third Quarter

Thursday, December 27, 2012

S&P 500 Stock Buybacks Decrease in Third Quarter10:00 EST Thursday, December 27, 2012Company Buyback Activity Erratic in Q3; Mixed Results Seen for Q4NEW 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 IndicesS&P 500, $ U.S. BILLIONSPERIODMARKETAS REPORTEDDIVIDEND &VALUEEARNINGSDIVIDENDSBUYBACKSBUYBACK $ BILLIONS$ BILLIONS$ BILLIONS$ BILLIONSYIELD09/28/2012 Prelim.$12,881$189.64$69.48$103.725.08%6/30/2012$12,303$195.27$67.31$111.755.35%3/31/2012$12,730$208.15$64.07$84.295.09%12/31/2011$11,385$186.76$65.89$87.595.67%09/30/2011$10,303$206.08$59.20$118.416.14%6/30/2011$12,021$202.44$59.03$109.244.88%3/31/2011$12,068$195.15$56.08$89.844.52%12/31/2010$11,430$187.67$54.85$86.364.42%09/30/2010$10,336$176.80$51.26$79.564.45%06/30/2010 $9,323$178.00$50.44$77.644.41%03/31/2010$10,560$157.85$49.28$55.263.36%12/31/2009$9,928$135.14$49.04$47.823.36%09/30/2009$9,337$130.37$47.21$34.853.71%06/30/2009$8,045$118.22$47.63$24.205.17%03/31/2009 $6,928$65.29$51.73$30.787.13%12/31/2008$7,852-$202.11$62.19$48.127.48%09/30/2008$10,181$86.16$61.44$89.716.73%06/30/2008$11,163$112.15$61.94$87.916.88%03/30/2008$11,511$135.24$61.72$113.907.25%12/31/2007$12,868$68.53$67.09$141.716.49%09/30/2007$13,470$133.66$61.21$171.955.89%06/30/2007$13,350$194.30$59.76$157.765.44%03/31/2007$12,706$190.75$58.53$117.705.35%12/31/2006$12,729$181.65$61.79$105.185.16%S&P Dow Jones IndicesS&P 500 20 LARGEST Q3 2012 BUYBACKS, $ MILLIONS CompanySECTORQ3,'12BUYBACKSQ3,'12-Q4,'04Johnson & Johnson Healthcare$12,183$51,512Exxon Mobil Energy$8,000$20,855ConocoPhillips Energy$5,098$189,716Intl Bus. MachinesInformation Technology$3,751$29,810AT&TTelecommunication Services$3,076$23,883Oracle CorporationInformation Technology$2,986$93,018Wells Fargo & CompanyFinancials$2,584$61,859American International GroupFinancials$2,003$15,924Cisco SystemsInformation Technology$1,835$32,899Wal-Mart Stores Consumer Staples$1,775$42,596American Express CompanyFinancials$1,632$105,855Philip Morris InternationalConsumer Staples$1,498$25,840The Coca-Cola Company Consumer Staples$1,250$39,804The Goldman Sachs GroupFinancials$1,228$42,158The Home DepotConsumer Discretionary$1,216$22,327JPMorgan Chase & CoFinancials$1,175$49,141Intel CorporationInformation Technology$1,122$24,827DIRECTVConsumer Discretionary$1,009$20,266PfizerHealthcare$1,004$14,564News CorporationConsumer Discretionary$973$28,633Top 20$55,398$935,487S&P 500$103,722$2,917,536Top 20 % of S&P 50053.41%32.06%About S&P Dow Jones IndicesS&P Dow Jones Indices LLC, a subsidiary of The McGraw-Hill Companies, Inc., is the world's largest, global resource for index-based concepts, data and research. Home to iconic financial market indicators, such as the S&P 500â and the Dow Jones Industrial AverageSM, S&P Dow Jones Indices LLC has over 115 years of experience constructing innovative and transparent solutions that fulfill the needs of institutional and retail investors. More assets are invested in products based upon our indices than any other provider in the world. With over 830,000 indices covering a wide range of assets classes across the globe, S&P Dow Jones Indices LLC defines the way investors measure and trade the markets. To learn more about our company, please visit www.spdji.com. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"), a subsidiary of The McGraw-Hill Companies, Inc. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones").  These trademarks have been licensed to S&P Dow Jones Indices LLC. It is not possible to invest directly in an index. S&P Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (collectively "S&P Dow Jones Indices") do not sponsor, endorse, sell, or promote any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices does not have the necessary licenses. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties.SOURCE S&P Dow Jones IndicesFor further information: 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