Apple Inc. (AAPL) Puts Its Money Where Its Mouth Is

$16 billion says Apple is cheap
Investors already knew that Apple raised that money to help fund its capital return program, but what we didn’t know was the rate at which it would do so. Apple boosted its share repurchase program by $50 billion in April to a total of $60 billion, with the goal of executing it through the end of 2015. Apple just blew threw a big chunk of that allowance, likely in order to take advantage of how cheap shares are.

After the bond offering, Apple turned around and immediately — less than a week later — repurchased $16 billion in shares. Of that, $12 billion is through an accelerated share repurchase, or ASR, program and $4 billion were open-market purchases.

That’s a huge figure that deserves some additional perspective. The amount that Apple just repurchased in one quarter is greater than Nokia Corporation (ADR) (NYSE:NOK)‘s market cap. It’s more than what Google Inc (NASDAQ:GOOG) paid for Motorola (before selling the Home division). Apple could have bought more than three BlackBerry Ltd (NASDAQ:BBRY)s with that total.

Sources: SEC filings and Reuters. Fiscal quarters shown. ASR programs occur over several months. Only initial payments shown.

That’s over a quarter of the entire authorization spent in one fiscal quarter, which allowed the company to retire approximately 32.5 million shares. That helped juice earnings per share, which otherwise would have fallen short of consensus if theoretically Apple had not bought back any shares.

That aggressive repurchase activity will save Apple $397 million alone in annual dividend costs considering the current $3.05 per share quarterly payout. At a weighted average rate of 1.85% on $16 billion, Apple is paying less than $300 million annually in interest to save almost $400 million in dividends. Not a bad deal. The tax deduction on the interest is just the cherry on top.

Apple Inc. (NASDAQ:AAPL) is just three fiscal quarters into its capital return program, and it’s already spent 30% of its allowance reinvesting in itself. If that’s not putting your money where your mouth is, then I don’t know what is.

The article Apple Puts Its Money Where Its Mouth Is originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple and Verizon Communications (NYSE:VZ). The Motley Fool recommends Apple, Google, and Intel. The Motley Fool owns shares of Apple, Google, and Intel.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.