Apple's $44 billion in stock buybacks have helped increase market cap by $100 billion

Apple's capital return program, focused on buying back stock, does appear to have had a favorable impact on Apple's share price. After spending $44 billion on stock buybacks over the past four quarters, Apple's stock has risen 29.2 percent or $129.28, a contribution that moved the company's market cap from $392 billion a year ago to $492 billion today, even as the company removed 80 million shares from circulation.

Removing 80 million shares from the market would seemingly have a negative impact on Apple's market cap, were the price per share not to also rise. Market cap is a company's stock price multiplied by the shares outstanding, and so is used as a convenient way to establish what the market has decided a company is worth.

In an ideally rational market, removing shares would simply increase the stock price to maintain the same market cap, because investors would "know" that fewer remaining shares in the same company would be worth more, if all other factors remained constant.

However, in addition to the number of shares changing due to Apple's buybacks, the company is also reporting improved fundamentals. Investors also have external concerns related to currency markets and the performance of Apple's competitors and other related and unrelated economic factors.

Add in a variety of other irrational factors and a complex picture emerges that, while apparently helping to reverse the direction Apple's stock price to reach the highest point since late 2012, Apple's stock still hasn't exceeded levels first seen in March 2012 or the all time peak reached in September 2012, when Apple shares hit $700, achieving a market cap north of $657 billion.

To return to its peak market cap valuation from September 2012, Apple's stock price would today need to reach above $760.

$104.3 million less in dividend payments after buying back shares

Apple now has 861.74 million shares outstanding, a significant drop from just one quarter ago when it had 892.55 million outstanding shares. The company's stock buyback program acquired 31.7 million shares in the March quarter, and will retire them.

Source: Ycharts.com

Having 31.7 million fewer shares outstanding means that Apple will pay out $104.3 million less in its total dividend payments this quarter.

While it now has 861.74 million outstanding shares, Apple has 1.8 billion authorized common shares, allowing it nearly a billion shares which it could offer for sale or grant to employees or use for other reasons.

However, issuing authorized stock (whether as a public stock offering in the form of stock based compensation) has the opposite effect of stock buybacks. It would dilute the value of Apple's other outstanding shares and have a negative impact on EPS.

As visible in the chart above, Apple's aggressive buyback program has, since the middle of 2012, sharply reversed Apple's previous trend of diluting outstanding shares with stock based compensation. Apple's outstanding share count has now returned to levels not seen since the summer 2007, back when Apple's shares were valued around $125.