NEW YORK (TheStreet) -- Apple (AAPL) fans in Silicon Valley are probably pulling their hair out this morning. They already think Wall Street is crazy and doesn't appreciate all the things Apple is doing.After Apple announced Tuesday night an increase in the dividend and buybacks to be worth $100 billion by the end of calendar 2015 (from $10 billion), the tepid stock price reaction this morning must have Apple fans thinking: What does Apple have to do to satisfy Wall Street? The Apple buyback and dividend increase is smart and it certainly won't hurt the stock price, but it's no panacea for the company either. I'll explain why on both of those counts. First, here's why it's smart. The company had previously committed to $10 billion in buybacks and dividends. Yesterday, it was upped by $50 billion. Guess what Apple had in operating cash flow last year? Almost $60 billion. The company won't be depleting the cash hoard at all by this, especially considering this is being spent over three years.
Also, Apple is going to borrow against its foreign cash to do this -- at ultra-low rates -- lowering the cost of capital and using foreign cash that's just sitting there gathering interest income. Does it help the stock? Well, Wall Street is being fickle Wednesday with the stock around $400 again. The Street wants new products -- and we'll get to that. But, they're being short-sighted if they don't like the magnitude of the buyback. For the sake of round numbers, let's say Apple will earmark $75 billion for buybacks at a pace of something like $25 billion a year. Does that matter? Well, look at Yahoo! ( YHOO). It's done about $2 billion in buybacks in the last six months. Let's say that it's been at an average price of $20 a share. That means the company retired about 100 million shares (probably a little more) over that time period. Yahoo! does a daily average volume of 18 million shares a day. In six months, there are about 120 trading days. That means there's been a total trading volume over that period of about 2.1 billion shares. That means Yahoo!'s corporate buybacks have only accounted for about 4.7% of the overall trading volume over that period.
By magnitude, Yahoo!'s purchases are about three times the size of the average daily volume as Apple's will be. So, Apple's purchases will certainly have a more muted effect than with Yahoo!, despite the fact that it is "the largest corporate buyback in history." However, the question is: Will the market know that, every day, Apple is going to be in the market buying back about 2% of the daily volume provide a floor on the stock and confidence that will help it rise from here. I think it's unquestionably a positive. So, let's talk about why this is no panacea for the stock. David Einhorn basically provoked Apple into action on this large cash pile and using it more effectively than it was before. So, I'm sure many other investors are happy about it. But the lukewarm reaction in terms of the stock price today also points to what investors really want from Apple -- growth. They're not going to get growth until Apple unveils new products.