What Led Oracle to Add $12 Billion to Its Share Buyback Program?



Oracle added $12 billion into its share buyback program

Earlier in the series, we looked into Oracle’s (ORCL) cash reserves. Apart from acquisitions, Oracle is likely to use its cash for dividends, share buybacks, R&D (research and development), and other business functions.

During its fiscal 2Q18 results, Oracle announced that it had added $12 billion to the company’s share buyback program. Oracle is one of the companies that aims to leverage the benefit of its overseas cash reserves as well as the tax bill to reward its investors. In early December, the US Senate approved the tax bill to lower tax rates to 20% from the current 35%. Since this announcement, 29 companies in various sectors have announced $70.2 billion in stock buybacks, according to The Intercept.

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Stock buybacks are expected to continue

After approval of the Republican tax bill on December 2, 2017, companies spent $70.2 billion on stock buybacks in less than one month, which suggests that we can expect a surge in stock buybacks if the tax bill comes into effect.

Apart from Oracle, Home Depot (HD), Bank of America, Honeywell, Anthem (ANTM), Boeing (BA), MasterCard (MA), and United Airlines have announced some of the biggest buybacks since December 5, 2017, as the above presentation shows.


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