Stock buybacks fall for second consecutive quarter

ExxonMobil led all U.S. companies in stock buybacks in the first quarter
(Haraz N. Ghanbari / Associated Press)

American companies are getting a bit hesitant about buying back their own stock.

Share repurchases by large companies fell in the first three months of this year, the second consecutive quarter of declining buybacks, according to Standard & Poor’s Corp.

Buybacks among companies in the S&P 500 index slipped 3.8% to $84.3 billion as companies held more tightly to their cash. After rising for nine straight quarters, repurchases decreased for the first time in the fourth quarter of last year, according to S&P.


The decline in repurchases may reflect a newfound sagacity among corporate managers, given that the pullback coincided with a sharp rise in the stock market. Companies have wasted money in the past by gobbling up their own shares just before the stock market tumbles.

Or companies simply could be reacting to a drop in the amount of cash on their books. Though cash levels remain very high, corporate cash reserves decclined slightly in the first quarter, according to S&P.

It’s possible that buybacks will expand again. The number of planned buybacks announced by companies has continued to grow, a sign that repurchases themselves will rise if companies follow through.

“Share count reduction, which was increasing for most of 2011, has declined with many companies holding back on aggressive buybacks,” said Howard Silverblatt, Senior Index Analyst at S&P Indices. “The flip side is that authorizations are still strong which, if market conditions cooperate, provides companies with the option to increase actual buying programs.”

Exxon Mobil led the way in repurchases, spending $5.7 billion in the first quarter, up from $5.4 billion in the fourth quarter, according to S&P.

International Business Machines and American International Group each spent $3 billion, followed by Procter & Gamble at $2.3 billion and AT&T at $2.1 billion. Lowe’s, Oracle and Motorola Solutions had sizable buyback increases, while Pfizer, Time Warner and Travelers had notable decreases.


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