How much $AAPL has Apple eaten with its $44 billion buyback appetite?

Celebrity investor Carl Icahn made news when he bought over $1 billion of Apple stock earlier this year, but Icahn's investment pales in comparison to the company's own $60 billion stock buyback program, which gobbled up $16 billion in shares over the June quarter.

At the beginning of the current quarter, Apple had $44 billion left of its buyback budget, which wasn't due to be spent before 2015 according to the terms of the buyback plan. It’s also optional; Apple could decide to stop buying shares and simply let the plan expire.

However, given that Apple splurged a third of its allocated share buyback funds in the June quarter to buy up 36 million shares at an average price of $444, it appears likely that it has continued to aggressively take advantage of its acutely low stock price over the past three months (apparent in the trough of the chart above).

The current September quarter began with AAPL stock at $409 and continued below the average share price Apple had been paying to buy up stock in the prior quarter through the final two days of July. Since then, the stock has only bumped up to a peak of $502, its highest point of 2013 but still 30 percent lower than its highs from one year ago.Another quarter of big stock purchases could reduce the company's total shares by 4 percent to as much as 11 percent.

That means Apple could turn in another record quarter of buybacks that match or exceed the value-performance of the June quarter, easily erasing another 36 million outstanding shares or potentially as many as 100 million shares, were Apple to buy all the stock its current buyback plan allowed at the price levels available in July.

Before retiring any new buybacks, Apple had 908 million shares outstanding, so another quarter of big stock purchases could reduce the company's total shares by 4 percent to as much as 11 percent, resulting in a significant impact on its revenue per share and earnings per share metrics.

The company won't actually report the size of its September quarter buyback until late October when it is scheduled to disclose its overall quarterly results.

Why wait?

The only reason for the company to not have vigorously exercised its buyback program would be if Apple had expected its stock to drop in the future, or if it weren't able to find sufficiently cheap shares to buy.

There's been plenty of opportunity for Apple to buy back its shares at low market rates, evidenced by AAPL shares dropping and staying depressed every time an analyst issued a reduced outlook based on illusory supply checks or the failure of the company to follow the analyst's desired strategies.

On the other hand, there's good reason to believe the company has recognized the current quarter as being as a unique opportunity for buying back shares, one which might not every occur again at today's prices.

In the June quarter, Apple faced reasonable uncertainty about whether its stock price might go down even further in the September quarter. The company knew it wouldn't be introducing any major new products before the end of September, and it had reason to believe that the market might react irrationally to risks inherent in its substantial transition to iOS 7, which it first unveiled in June.

Window of opportunity for cheap buybacks closing

At this point however, 2013 has seemingly nowhere to go but up. Over the next month, Apple is expected to announce new Macs, new iPads and new software along with the new OS X Mavericks. If Apple hasn’t already blown its budget, it may have blown its best chance to do so.

Apple’s upcoming product introductions are all being timed to explode in a spectacular holiday buying season, where they will be met by tepid Android offerings, a weakly positioned Windows 8 and a much ballyhooed "smartwatch" competition that was essentially canceled due to a lack of interest.

Last weekend's iPhone 5s and 5c launch sold 9 million devices, generating at least $5.4 billion in additional revenues for Apple within the quarter, without counting accessories, AppleCare, App Store purchases or other retail-related sales related to that hardware, prompting the company to report that it expects to announce results at the high end of its previously stated guidance of $34 billion to $37 billion in revenue.

That 3 day launch made the company roughly $4 billion more confident than it had been about the current quarter's performance, with just ten days left in the quarter.

Cook’s quiet competence

While more than one irate Apple investor has fumed in public about an apparent lack of action from the company’s chief executive to prop up its share price, it's very likely that Tim Cook has been taking analysts' lemons and making buyback lemonade.

That's not only the most competent action Cook could possibly be taking given the circumstances, but also the very thing Cook announced he would be doing when the share repurchase program was outlined.

Apple was clearly racing to get its new iPhones done in time to include at least some of their initial revenues within the September quarter. The success of the launch is going to have an impact on Apple's share price, which has been beaten up by poorly informed sources fretting about "innovation” for nearly an entire year while the company has had virtually no new products to talk about. It's very likely that Tim Cook has been taking analysts' lemons and making buyback lemonade.

Advancing the new iPhones' launch to occur before the end of the final quarter of Apple's fiscal 2012 means the market will have something satisfying to digest starting in October, just as Apple's peak holiday Q1 sales get started. At that point, having lots of money left over to spend on stock buybacks would greatly dilute the potential value of the buyback plan.

At a share price of $650 or $850, Apple's $44 billion budget would only be able to fetch between about two-thirds to one-half of the buying power that buyback fund could have achieved earlier this quarter.

End of an illusion

Going forward, it will be far more difficult for hedge funds, analysts and competitors to again seed the notion that Apple is doomed and that Samsung can be nothing but successful in taking its place, given how Apple has done nothing but grow stronger this year, while Samsung has erased its legendary reputation for unbridled growth, “forward thinking” innovation and all-around competence. It has lost in the market, in the courts, and in public perception.

It's also noteworthy that Icahn continued to push Apple's executive team to pursue buybacks into August, after the stock "recovered" to its highest point of 2013. If Icahn were merely after a short term gain, his continued tweeting and a push for dividends would make more sense than lobbying for Apple to buy shares at ostensibly its "new normal." Buybacks only make real sense if a stock is poised to go up.

Apple set records with its $16 billion worth of share buybacks in the June quarter. It could exceed those in the current September quarter. In fact, if it hasn't already it may have forever missed the opportunity to buy its own shares for so little, squandering the value of setting aside $60 billion expressly for the purpose of doing that very thing.