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S&P 500 Buybacks Set Record of $589 Billion in 2007
added: 2008-04-08

Standard & Poor's, the world's leading index provider, announced that preliminary S&P 500 stock buyback activity for 2007 was a record $589 billion, easily surpassing 2007 cash dividends of $246 billion and slightly larger than 2007 As Reported GAAP earnings of $587 billion. The $589 billion in share repurchases represents a 36.4% increase over the $432 billion spent in 2006, and a 350% increase from the $131 billion recorded five years ago in 2003.

"The record activity in 2007 was fueled by several mega-billion dollar buybacks, in particular the ten companies that spent a combined $148 billion on stock repurchases during the year," says Howard Silverblatt, Senior Index Analyst at Standard & Poor's. "Standard & Poor's expects buyback activity to continue at a high level for 2008, but not at a record setting pace, as corporations and investors continue to be concerned about the economic and liquidity issues."

According to Silverblatt, fourth quarter 2007 buyback activity was strong, posting an estimated $142 billion in share repurchases. The quarterly value represented a 34.7% increase over the fourth quarter of 2006 and ranks as the third largest expenditure of all-time, behind the $172 billion spent during third quarter of 2007, and the $158 billion spent during the second quarter of that same year (2007).

On a sector basis, Standard & Poor's notes the shift in sector buyback participation. "Financial issues continue to pull back on buybacks, accounting for just 13.4% of the aggregate repurchases during the fourth quarter of 2007 compared to 22.3% during the fourth quarter of 2006," adds Silverblatt. "Information Technology remained the prime player in the buyback market, with 22.5% of the buybacks, partially due to their use of options to supplement employee salaries."

Over the past thirteen quarters, since the buyback boom began (Q4 2004), S&P 500 issues have spent approximately $1.44 trillion on stock buybacks compared to $1.56 trillion on Capital Expenditures and $721 billion on dividends.

Source: PR Newswire

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