To Buy Back or Not to Buy Back...

Dozens of companies have suspended their stock buybacks in recent weeks -- and for good reason. When times are tough for the economy and corporate revenues are falling, it's hard to justify spending money on what amounts to a shareholder bonus. 

In mid-March, the eight largest U.S. banks said that they were all suspending share buybacks through the second quarter of the year. The Financial Services Forum, which represents Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo, cast the decision as being in the best interests of bank clients and the country: 

The Covid-19 pandemic is an unprecedented challenge for the world and the global economy and the largest U.S. banks have an unquestioned ability and commitment to supporting our customers, clients and the nation.  

The decision on buybacks is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services.

Much of the corporate world has since followed suit. AT&T, Coca-Cola, Chipotle Mexican Grill, Eli Lilly, Merck, Intel, American Express, UPS, Caterpillar, Harley-Davidson, Starbucks, Mastercard, and Ford Motor are among the companies that have talked about suspending stock repurchases on their recent earnings calls. 

But big tech companies often march to a different beat. And, so far, they're sticking with their expensive buyback habits. In the first quarter, Google-parent Alphabet repurchased $8.5 billion worth of stock. Barron's Andrew Bary notes that was a record quarterly haul for the company. 

During the company's earnings call Tuesday night, analysts asked executives how they would proceed in the second quarter. Here's CFO Ruth Porat's response: 

And then on your second question on capital returns, we believe a share repurchase program for us, appropriately sized, is responsible in the current environment based on our capital allocation framework and our cash balance. So at the beginning of the year, I indicated that we expected to repurchase shares at a pace at least consistent with the fourth quarter on the remaining authorization, and that remains our view for the second quarter.

(The company bought back $6.1 billion worth of stock in the fourth quarter.)

The buyback plan stands in contrast to other moves Alphabet is making, including a recent decision to slow hiring. Here's how Sundar Pichai explained that decision on the call last night:

Given that we are faced with a global crisis of uncertain depth and duration, we have been focused on taking steps to enhance efficiency, including slowing the pace of hiring and some categories of marketing spend as well as further enhancing machine utilization. 

Microsoft and Facebook -- today's big-tech reporters -- have also been binging on buybacks. Microsoft tonight said it returned $9.9 billion to shareholders in the first quarter in the form of buybacks and dividends -- that figure was up 33% from a year ago. In a separate document, the company disclosed that $6 billion of that total was buybacks. Facebook bought back $1.2 billion during the quarter. Neither company was pressed for details tonight on their second-quarter buyback plans, and they didn't volunteer the information. 

Apple -- which has the most generous generous buyback program among big tech -- reports its March-quarter results tomorrow night. In the last quarter of 2019, the company repurchased a whopping $20 billion worth of stock.