Stock price (P) = market price of operating business (O) + extra cash on balance sheet (C)
By using extra cash to buy shares from public market, company reduces number of shares outstanding. The reduced number causes stock price to go up, in order to maintain the same PE. At the same time, though, extra cash on hand is reduced, which should lower stock price, according to the above formula. The two forces cancel each other, such that in the end the stock price remains the same.
This is also intuitive, because after all, buyback is just financial engineering, which should not alter company's true value.
