From the article:
"At the same time, the company plans to do what it can to support the stock price for investors by buying back shares. AstraZeneca said it will buy back another $4.5 billion of stock this year; it purchased about $5 billion in stock in 2011, its biggest buyback to date."
Looks like a Ponzi strategy. The shares have lost value so if anyone wants to sell, AZ has the cash to gobble up the supply and prop the stock price up with artificial demand. But AZ is losing its ability to generate cash. The value in the company is declining, so every penny AZ spends on shares will likely lose money because the stock value is eroding away with every patent expiry.
This is a poor use of other people's money and the executives running AZ may not even be aware of it, since they published it as a business strategy. The proper thing for any company to do with investors' money, if they can't allocate it to generate a good return, is to return it in a special dividend, according to Benjamin Graham.
That 5 billion spent last year on shares probably isn't worth the 5 billion spent on shares today, unless the buys were timed to perfection -- check out the trend line in the stock:
http://finance.yahoo.com/echarts?s=...=on;ohlcvalues=0;logscale=on;source=undefined
It's a safe bet, based on the stock chart, that the 5 billion spent on shares last year lost around 5% in value. (That's $250 million.) AZ should be investing the excess capital in the pharmaceutical business or they should return the investors' money to them.
Of course a side effect of this strategy is that any share awards that come due will likely still be worth a lot of money for the people getting share awards, if the share awards are paid at a future date. Maybe that's what's up? Maybe the stock price support isn't "for investors," instead, maybe it's for the executives waiting for their share awards to mature.
