S&P Indices announced today that preliminary results show that S&P 500 stock buybacks decreased 3.8% to $84.3 billion during the first quarter of 2012, the second quarterly decline in a row for buybacks after nine consecutive quarters of increases. The first quarter results also represents the first year-over-year decline in buybacks (-6.2%) posted by S&P 500 companies since the fourth quarter of 2009. 

"Companies continued their pullback on share repurchases which started in the fourth quarter of 2011," says Howard Silverblatt, Senior Index Analyst at S&P Indices. "While the average stock price was up 11.2% in the first quarter, companies spent 3.8% fewer dollars on buybacks, meaning the actual number of shares repurchased decreased more than the aggregate dollars spent would indicate."

"While programs continue to be announced, there now appears to be growing gap between authorizations and actual trades. The pullback was a management choice, as cash levels remain at a very high level. However, cash did post a slight tick down for the first time after 13 consecutive quarters of record setting levels."

On a sector basis, Silverblatt notes that Energy buybacks declined 17.7% during the first quarter even as their share prices increased 3.4%.    Information Technology spent 16% fewer dollars on buybacks (to $14.4 billion from $17.1 billion), falling to second place behind Consumer Discretionary (which spent $17.4 billion, up from $15.4 billion).

"Of note is that AT&T returned to the buyback market, spending $2.1 billion during the quarter, which is their first significant activity since their $2 billion purchase during the second quarter of 2008," notes Silverblatt. "Overall, share counts for the S&P 500 declined slightly during the first quarter; however, 244 issues reported higher diluted shares used for earnings this quarter, with 218 reporting fewer shares."

Exxon Mobil continues to be the poster child for share repurchases spending $5.7 billion on buybacks during the first quarter, up from its $5.4 billion share repurchase level for the fourth quarter. Trailing Exxon during the first quarter was International Business Machines with $3.0 billion in share repurchases, American International Group (also returning to the buyback market) with $3.0 billion, Procter & Gamble with $2.3 billion, and AT&T with $2.1 billion. Other notables were significant increases for Lowe's, Oracle, and Motorola Solutions, as well as significant decreases for Pfizer, Time Warner, and Travelers.

For the second quarter of 2012, Silverblatt says: "Share count reduction, which was increasing for most of 2011, has declined with many companies holding back on aggressive buybacks. The flip side is that authorizations are still strong which, if market conditions cooperate, provides companies with the option to increase actual buying programs."