J&J, ConocoPhillips plan stock buybacks worth $25B

Johnson & Johnson (JNJ) and ConocoPhillips (COP) announced on Monday plans to repurchase a combined $25 billion of stock, adding to this year's record pace of U.S. share buybacks.

J&J, the world's largest maker of health care products, will use a combination of cash and debt to fund a $10 billion repurchase program, the company's largest. ConocoPhillips, the third-biggest U.S. oil producer, plans to buy back as much as $15 billion of its shares through 2008.

The buyback announcements follow record repurchase programs initiated this year by Home Depot (HD) and IBM. (IBM)

U.S. companies have announced $415 billion of share buybacks in 2007, 24% ahead of last year's record pace, according to Birinyi Associates data as of June 29.

"Corporations are flush with cash to the extent they feel they can grow their businesses and still have money left over to return to shareholders," said James Awad, who oversees about $1.3 billion as chairman of Awad Asset Management in New York. "One of the legs of this bull market has been that the supply of common stocks has been shrinking."

The Standard & Poor's 500 index needs to rise 0.5% to break its June 4 record, while the Dow Jones industrial average is 0.2% away from its all-time high. In the first quarter, S&P 500 companies spent $118 billion on buybacks, the most for a quarter, according to S&P.

J&J said it will use its AAA credit rating to finance an unspecified portion of the repurchases, which have no time limit.

The stock gained 59 cents, or 1%, to close at $62.72 Monday in New York Stock Exchange composite trading. The shares have gained 2.9% in the past year, underperforming the 16% increase in the 54-member S&P 500 Health Care index.

ConocoPhillips will spend $2 billion to $3 billion repurchasing stock in the third quarter, and a similar amount in the fourth, it said.

ConocoPhillips shares gained $3.01, or 3.7%, to a record $84.05. The stock is the second-worst performer in the seven-member S&P 500 Integrated Oil and Gas index this year after ExxonMobil, the world's largest oil company.

Home Depot last month said it may buy back a record $22.5 billion of its stock, using proceeds from the sale of its contractor-supplies unit, existing cash and $12 billion of bonds. The shares have climbed 5.1% since the announcement. They fell 0.2% to $40.23 Monday.

IBM in April added $15 billion to its stock-buyback program, the most ever. The company said it would take on debt to finance much of the buyback. The shares have gained 14% since the announcement. They fell 0.1% to $108.97 Monday.
(Source USA Today)