Naked Capitalism has the article Marshall Auerback: Apple Has an Early Case of GE’s Disease.
To be fair to Apple, it is hardly unique. As early as 2010, market analyst Rob Parenteau noted that company managements, “ostensibly under the guise of maximizing shareholder value, would much rather pay themselves handsome bonuses, or pay out special dividends to their shareholders, or play casino games with all sorts of financial engineering thrown into obfuscate the nature of their financial speculation, than fulfill the traditional roles of capitalist, which is to use profits as both a signal to invest in expanding the productive capital stock, as well as a source of financing the widening and upgrading of productive plant and equipment.” Likewise, Professor William Lazonick noted in his work, “Profits Without Prosperity,” that the 449 companies that were publicly listed between 2003 and 2012 “used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market.”
Share buybacks were effectively illegal under SEC rules until 1982, in the midst of the Reagan deregulation wave, when SEC Rule 10b-18 was introduced. Until that time, buybacks had been considered a form of stock manipulation. As early as the mid-1980s, more and more companies have resorted to them, and the practice has grown exponentially.
In one sense stock buy backs are effectively shrinking the size of the company to match the shrinking demand for its products. That may be wise policy, but the stock buyback masks what is going on from investors who only look at the per share numbers. Of course, turning cash into debt is not the smartest thing one could do if you cared about the longevity of the company.