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Johnson & Johnson Announces $10 Billion Buyback Ahead Of Earnings To Stabilize Sliding Stock Price
Perhaps the only chart more troubling than JNJ's stock price in 2015, which after starting the year around $105/share has since tumbled to a low of $91, before rebounding modestly to $95, was the chart of its stock buybacks, shown below.
We leave readers to pull it up on their own, but this chart of JNJ buybacks correlates virtually 1:1 with the performance of the company's stock price, once again confirming that in the New Normal world, where the only margina buyer of Index futures are central banks, when it comes to individual stocks, the biggest buyer is the company itself.
In any event, with JNJ about to announce - what are almost certain to be very bad - earnings in just a few minutes, the company decided it was prudent to set the mood by preannouncing, less than an hour before earnings, good days are back again and that the company will do all in its power to not only increase the buyback pardon equity-linked compensation of CEO Alex Gorsky, but to reward shareholders for sticking with a company that hasn't announced a major buyback plan in recent months.
To wit:
Johnson & Johnson (JNJ) today announced that its Board of Directors has approved the repurchase of up to $10 billion of the company's common stock."We are pleased that Johnson & Johnson's strong balance sheet and cash flow enable us to simultaneously return value to shareholders through our regular quarterly dividend and share repurchases, while at the same time continuing to invest in internal and external opportunities that will further strengthen our robust enterprise pipeline and drive long-term growth," said Alex Gorsky, Chairman and Chief Executive Officer. "The Board of Directors and management team believe that the company's shares are an attractive investment opportunity and repurchasing stock is an important part of our capital allocation strategy."
Repurchases may be made at management's discretion from time to time on the open market or through privately negotiated transactions. The repurchase program has no time limit and may be suspended for periods or discontinued at any time. Any shares acquired will be available for general corporate purposes. The company had approximately 2,767.3 million shares of common stock outstanding as of September 27, 2015.
We are confident both Hillary Clinton and Bernie Sanders will unleash the full wrath of populist pandering on Mr. Gorsky who instead of spending billions to make JNJ's medical devices drugs more cost-effective and thus cheaper and more affordable by the sinking US middle class, has decided to reward himself and other shareholders with this latest gift courtesy of bond investors desperate to earn any real return by managing other people's money, and who apparently have nothing better to invest in than generating outsized returns on Mr. Gorsky's own portfolio.
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The Elysium class will be so happy.
"These are not the earnings you are looking for." - Johnson and Johnson
Step 1 -- Borrow lots of money at essentially 0
Step 2 -- Buyback your own stock with new funds
Step 3 -- Executive board & management get massive bonuses.
Step 4 --
Step 5 -- Interest rates go up
Step 6 --
Step 7 -- Sell stock at loss to pay interest expense
Step 8 --
Step 9 -- ????? lol wtf
Step 10 -- Bankruptcy
Fake it till you make it.....or not.
JNJ to be announcing layoffs in 5, 4, 3, ...
"I'm a Synthes Legacy employee at JNJ located in WC and I don't really feel as though WC is the apparent victor. We are not making our numbers, therefore we are all at risk, regardless of location. The next "transformation" (or whatever they label it) could be really ugly.
The lack luster performance OD DePuy Synthes combined with the recent fold under GP's control means significant head count reductions for sure. J&J stock is back to trading in the 98 to 99 range. Time for the ax to fall. Lots of people will be impacted. Higher salaries long term employees impacted first. It's all about cost reduction."
http://cafepharma.com/boards/threads/johnson-johnson-depuy-synthes-layof...
The ghost of Kenneth Lay at JJ.
In other news, the Rooskies were finally implicated in MH-17(so says our gold news standard Yahoo)
We are supposed to worship management for their skills
Screwed by management again.
" instead of spending billions to make JNJ's medical devices drugs more cost-effective and thus cheaper has decided to reward himself and other shareholders."
But it's a FAMILY company!
That's SC Johnson. Wax off!
I should remember my commercials better!
"repurchasing stock is an important part of our capital allocation strategy."
its like that one casino buying back its chips noone wants...
Issuing debt to fund share buybacks is definitely bullish longer term for your stock. /sarcasm.
Margin accounts are booming.
Long Migraine medications.
Don't cost nothing.
Well.. if you WORKS at J&J?? BE PREPARED to look for ANOTHER JOB!!
You do know, what publicly traded company would do, after buyback is failed, right??
If it was not for buybacks..there would be no stock market the last couple of years.....the little guy has left the casino....its just the buybacks and HFTs now
How many companies or Countries for that matter still have a AAA rating. If I were to ask which companies would you want heading into the storm in your portfolio vs JNJ ...
..the list is short.
I think researching debt to equity ratios will be important in a few years. I'm not saying you will get the true numbers from these scumbag corporations cooking their books, but it will be important to try to figure out the true debt to equity ratio if you invest in stocks.
SO MANY COMPANIES ARE SO FUCKING BROKEN. WHAT THE FUCK DOES THE FED THINK OF THIS BALANCE SHEET RAPE??? THIS IS WHAT CORPORATE AMERICA HAS COME TO??? ALL THE FED'S PRINTING IS FOR SHIT.
FUCK YOU JNJ!!!!!!!!!! BASTARDS!!!!!!!!!!!!!!!!!!!!!!!!!
Fed's infinite cheap money has caused distortions beyond anyone's imagination.
They used to say if you can't do it, teach it.
On Wall Street they now say, if you can't run it, buy it.
As a JNJ shareholder I'd rather have a special dividend.