By Tess Stynes
Stock buybacks by S&P 500 companies in the third quarter declined from the second quarter as repurchases were "erratic," according to Standard & Poor's Dow Jones Indices.
The value of stock buybacks dropped 7.2% to $103.7 billion in the period and were down by $17.7 billion through the third quarter from the year-earlier period.
"Given the continued uncertainty of the fiscal cliff and the potential impact on spending, companies may have taken a cautious approach to stock buybacks in the fourth quarter," said Howard Silverblatt, S&P Dow Jones senior analyst. "In the background, however, is some talk of companies needing more shares to meet employee options, with more being exercised near year-end due to the anticipated tax change."
Johnson & Johnson's (JNJ) $12.2 billion in share repurchases ranked as the highest expenditure in the third quarter. The pharmaceutical giant also had the biggest amount of buybacks in the second quarter at $12.9 billion.
The health-care sector dominated the third quarter with $21.8 billion in buybacks, though that was a decline from the $23.8 billion seen a quarter earlier. The information-technology sector had the second-highest buyback spending at $18 billion, though that marked a drop from $21.6 billion.
The top 20 companies represented about 53% of the buybacks in the third quarter, up sharply from 38% a year earlier.
"Still companies are broadly participating, with 258 issues reducing their overall diluted share count [buybacks less issuance], and 192 increasing [in the third quarter]," Mr. Silverblatt said. "More relevant is that 125 issues reduced their count by at least 1%, while only 23 increased it by at least 1%."
Write to Tess Stynes at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires