Over the last five years, tech firms have been on a share buyback bonanza. Research from Howard Silverblatt, senior earnings analyst at S&P Dow Jones Indices, highlighted in a WSJ.com article shows that seven of the 13 biggest buybacks over the last five years were made by tech firms.

Among the 13 share buybacks of at least $25 billion over the last five years, Exxon Mobil (XOM) led the pack, spending $91.9 billion. This was followed by IBM (IBM) at $63.7 billion and Microsoft (MSFT) at $37.5 billion.

BN-CC285_BUYBAC_P_20140326125038According to the article, the fact that tech companies top the list is indicative that the sector has matured since the days of the 1990s tech bubble. Even Apple (AAPL) made the list with just under $30 billion in share buybacks even though it only started repurchasing shares in 2012.

There is some debate, however, over whether this is an efficient allocation of capital or whether spending the money on things such as research and development would better serve the companies and, ultimately, shareholders.

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Wayne Thorp
ABOUT THE AUTHOR:

Wayne A. Thorp, CFA, is editor of Computerized Investing and a vice president and the senior financial analyst at The American Association of Individual Investors (AAII). He is also the program manager for AAII's Stock Investor Pro fundamental stock screening and research database program and is on the advisory boards of AAII's Stock Superstars Report and Dividend Investing newsletters. He holds the Chartered Financial Analyst (CFA) designation and is a 1997 honors graduate of DePaul University in Chicago. Wayne's interests include stock screening, technical analysis and charting, social media and tech gadgets. However, in the summer he'd prefer to be hip-deep in northern Michigan's Manistee River fly-fishing for rainbow trout.

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